CleanSpark Borrows Against Bitcoin Mining Rigs to Get $35M for More Mining Rigs

Bitcoin miner CleanSpark has agreed to borrow up to $35 million from Trinity Capital to purchase more mining equipment.

The three-year financing agreement has been secured by 3,336 new S19j Pro Bitcoin mining rigs, according to a Securities and Exchange Commission filing submitted Friday. The company has 23,000 Bitcoin miners in operation, and expects to add 12,000 before the end of October.

The Las Vegas-based Bitcoin miner, which trades on Nasdaq under CLSK, immediately receives $20 million, and has until the end of the year to draw down on the remaining $15 million in increments of $500,000.

“As we mentioned in our Q1 earnings call, debt capital is currently the lowest cost of capital available to the company,” CFO Gary Vecchiarelli state in a statement. 

CleanSpark isn’t alone in using crypto assets—in this case, mining hardware—to secure loans rather than relinquishing shares of the company. In March, MicroStrategy CEO Michael Saylor used the company’s Bitcoin to secure a loan to buy more Bitcoin.

News of CleanSpark’s financing comes just a month after the company announced it would add 500 megawatts of mining power to its facility in Fort Stockton, Texas. It will be a gradual process, the company said last month, as it expects to have added 50 MW by the end of the year and another 150 MW by this time next year.

The company’s shares closed at $7.04 on Tuesday, down 11% on the day, while the Nasdaq Composite finished down 4%.

It’s been a rough start to the year for the publicly traded Bitcoin miner—shares have fallen 26% since the start of January. It’s not alone.

Even with the Nasdaq Composite losing 21% so far in 2022, most publicly traded Bitcoin miners have fared far worse—Riot Blockchain (RIOT) is down 51%, Bitfarms (BITF) has lost 45%, and HIVE Blockchain (HIVE) has tumbled 41%.