Why Bitcoin Cash and shares of CleanSpark and Hut 8 Mining are rising today

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What happened

Cryptocurrencies and crypto-related stocks rose on Wednesday as more traditional financial firms jump into space. The price of the world’s largest cryptocurrency, Bitcoin, had surpassed $30,600 at the time of this writing.

Since late afternoon yesterday, the price of Bitcoin Cash (or BCH, a cryptocurrency created in August 2017 in a separation from the hard blockchain of Bitcoin) was more than 21% higher than 12:35 p.m. ET today. Meanwhile, shares of Bitcoin mining companies CleanSpark (CLSK 11.45%) and Hut 8 Mining (HUT 7.81%) rose more than 13% and around 10.5%, respectively, on the day. .

So what

In recent weeks, the Securities and Exchange Commission (SEC) has been harshly critical of the crypto industry, first suing Binance, the world’s largest crypto exchange, and then Coinbase Global (COIN 1.36%). This comes after two crypto banks have been closed since late 2022.

Image source: Getty Images.

But the review appears to have opened the door for more traditional financial firms to enter the fray. Yesterday the media reported that a crypto exchange called EDX Markets, which is backed by Fidelity, Charles Schwab, and Citadel, is now up and running.

Also yesterday, news outlets reported that Deutsche Bank (DB 1.13%) is now looking to become a crypto custodian in Germany. In the past, the bank has expressed an interest in being a custodian so that it can provide customers with “an institutional-grade hot/cold storage solution with insurance-grade protection.”

Bitbank analyst Yuya Hasegawa wrote in a research note today: “Expectations for BlackRock’s approval [Bitcoin] Exchange Traded Fund (ETF) and rumors that Fidelity is preparing to apply for a similar ETF have led [Bitcoin] moving regularly since the beginning of the week.”

Bitcoin Cash leads the cryptocurrency gains today, likely due to the fact that it is one of the select tokens that EDX will be offering on its platform to begin with.

Separately, CleanSpark today announced in a press release that it will be purchasing two turnkey Bitcoin mining campuses in Dalton, Georgia, with over 6,000 mining machines for $9.3 million. The purchase should increase the company’s exahash per second (EH/S) rate by just under 1 EH/S.

CEO Zach Bradford said: “This acquisition ensures we have more than enough infrastructure to meet our year-end target of 16 PE/S. It also continues to position us as one of the strongest miners energy efficient in an energy market. -by hashrate.”

Chief Financial Officer Gary Vecchiarelli said the company continues to improve its operations in preparation for next year’s Bitcoin halving, which many investors see as a catalyst.

“It is important to note that this acquisition is fully funded from our existing cash reserves, and we expect it to begin generating revenue for our bottom line almost immediately,” Vecchiarelli said.

Now what

The crypto sector seems to be benefiting greatly today from the excitement of increased institutional interest in digital assets, which seems to be necessary given the heightened regulatory oversight.

CleanSpark is certainly benefiting from its acquisition announcement today, but bitcoin miners tend to do well when the price of the crypto rises because that’s the asset they mine and hold.

Ultimately, I prefer to hold the larger and more established cryptocurrencies like bitcoin over other games in the space like bitcoin miners or altcoins. But I think CleanSpark is well positioned among its peer group.

Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Bram Berkowitz has positions in Bitcoin and Bitcoin Cash. The Motley Fool has positions and recommends Bitcoin and Coinbase Global. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.

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