What happened
Cryptocurrencies and crypto-related stocks moved higher on Wednesday as more traditional financial companies are jumping into the space. The price of the world's largest cryptocurrency, Bitcoin, had blasted over $30,600 as of this writing.
Since late afternoon yesterday, the price of Bitcoin Cash (or BCH, a cryptocurrency created in August 2017 in a hard-fork blockchain split from Bitcoin) was more than 21% higher as of 12:35 p.m. ET today. Meanwhile, shares of the Bitcoin-mining companies CleanSpark (CLSK 4.00%) and Hut 8 Mining (HUT +0.00%) were up more than 13% and roughly 10.5%, respectively, on the day.
So what
In recent weeks, the Securities and Exchange Commission (SEC) has come down hard on the crypto industry, first suing Binance, the world's largest crypto exchange, and then Coinbase Global (COIN 1.55%). This comes after two crypto banks have gone down since the latter part of 2022.
Image source: Getty Images.
But the scrutiny seems to have opened the door for more traditional financial firms to enter the fray. Yesterday, news outlets 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 +0.35%) is now seeking to become a crypto custodian in Germany. In the past, the bank has expressed interest in being a custodian so it could provide clients with "institutional-grade hot/cold storage solution with insurance-grade protection."
Bitbank analyst Yuya Hasegawa wrote in a research note today, "Expectations for the approval of BlackRock's [Bitcoin] Exchange Traded Fund (ETF) and rumors that Fidelity is preparing to apply for a similar ETF have led [Bitcoin] to move steadily since the beginning of the week."
Bitcoin Cash is leading cryptocurrencies in gains today, likely due to the fact that it is one of the select tokens EDX will offer on its platform to start.
In other news, CleanSpark announced in a press release today that it will purchase two turnkey Bitcoin mining campuses in Dalton, Georgia, with more than 6,000 mining machines for $9.3 million. The purchase is expected to boost the company's exahash-per-second (EH/S) rate by just under 1 EH/S.
CEO Zach Bradford was quoted as saying: "This acquisition ensures that we have more than enough infrastructure to reach our year-end target of 16 EH/S. It also continues to position us as one of the most power-efficient miners on an energy-per-hashrate basis."
NASDAQ: CLSK
Key Data Points
Chief financial officer Gary Vecchiarelli said that the company continues to improve its operations in preparation for next year's Bitcoin halving, which many investors view as a catalyst.
"Importantly, this acquisition is fully paid for from our existing cash reserves, and we expect it to almost immediately start driving revenue to our bottom line," Vecchiarelli said.
Now what
The crypto sector largely seems to be benefiting today from excitement over increased institutional interest in digital assets, which seems like it will be needed given the increased regulatory scrutiny.
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 is the asset they mine and hold.
Ultimately, I prefer to hold the largest, most established cryptocurrencies like Bitcoin over other plays in the space, like Bitcoin miners or altcoins. But I do think CleanSpark is well positioned among its peer group.
