- Miners tend to have large Bitcoin inventory holdings
- The firm aims to lower cost, risks through its in-house desk
CleanSpark Inc., one of the largest US public Bitcoin mining companies, intends to launch an in-house trading desk this year to maximize returns from its holdings of the cryptocurrency.
“We really think that doing it ourselves is the best way especially with the large Bitcoin balance we have,” Zachary Bradford, chief executive officer of CleanSpark, said in an interview. “It just makes financial sense to do it in-house.”
A slew of Bitcoin miners have already used crypto derivatives such as options to earn income from their token reserves. Marathon Digital Holdings Inc., which had more than 14,000 unrestricted Bitcoin as of Nov. 30, has sold Bitcoin call options contracts to generate income. Calls give the buyer of the contracts the right to purchase the underlying asset at a specific price within a set time period.
“I think what will happen is miners like ourselves will start having trading desks in-house,” Bradford said. “That way, you can manage it with your own risk profiles and expertise and keep a really close eye on it.”
CleanSpark, based in Henderson, Nevada, held 2,575 Bitcoin valued at around $97 million as of November. The company posted $168 million in revenue during the fiscal year that ended in September 2023.
The move comes as crypto miners hold onto more Bitcoin with the digital asset soaring in value amid optimism that the US will finally approve an exchange-traded fund physically backed by the cryptocurrency. Bitcoin jumped almost 160% last year.
Bitcoin mining is an energy-intensive process in which miners use specialized computers to validate transactions on the Bitcoin blockchain and earn rewards in the token.
CleanSpark’s shares surged 440% to around $11 last year, raising the company’s market capitalization to around $2 billion. The stock tumbled around 79% in 2022 amid a broad decline in the crypto market.
Crypto-mining stocks as a whole have been on a tear as of late. The aggregate market cap of 14 US-listed miners increased 88% month-over-month to $17.2 billion in December, the highest level since November 2021, according to a report Tuesday by JPMorgan.
Bitcoin miners are an integral part of the crypto market structure. They have tapped into exchanges, over-the-counter trading desks as well as defunct lenders such as Celsius Network, Genesis Global Holdco and Babel Finance for debt financing or treasury management.
CleanSpark plans to make strategies based on regulated crypto offerings such as the option contracts traded on the CME or its affiliates. “We may have to move a small amount into different accounts but we will keep the cold storage custody with holders like Coinbase with segregated accounts,” Bradford said.
