CleanSpark CEO Zach Bradford (CLSK) joins Yahoo Finance to give insight into the bitcoin halving and what crypto traders can expect from bitcoin prices, crypto mining, and the larger cryptocurrency landscape.
Bradford talks on how he envisions CleanSpark's operating margins post-halving:
"Although we will go from about 900 new bitcoin a day being produced to 450. What that means is the efficient miners who have good solid margins will continue to have margins that are very healthy, but miners that were maybe smaller, didn't have scale, or were inefficient when it comes to their energy usage therefore their costs are higher, they won't be able to keep running their machines and as a result there will be less participants taking a piece of the pie. And therefore the large miner, our piece of the pie should get bigger after halving. We think to the tune of 10, 15, or even 20%."
SEANA SMITH: We're seeing Bitcoin rebounding this morning. Hovering just under $65,000. Now, regaining some of the losses that were suffered earlier in the session, just above $64,000.
Now, regaining some of those losses earlier in the session was driven by tension playing out in the Middle East. Now, the move higher coming ahead of that highly anticipated Bitcoin halving, which is expected to happen this week, and, maybe, even as soon as tonight.
So what's ahead for crypto and miners? Joining us now, we want to bring in Zach Bradford, CleanSpark CEO, Bitcoin mining company, here. Zach, it's great to have you.
So talk to us just about first the price action that we've seen in Bitcoin, specifically, this week in reaction to some of the tension escalating overseas in the Middle East. What does that signal just in terms of that volatility, then, were likely to continue to see for Bitcoin?
ZACH BRADFORD: Bitcoin is always a volatile asset. And it trades a lot with macro events, just as much as it trades amongst inflows and outflows. So we're seeing this as just a macro reaction. But what we're seeing is the bounce back, we believe, shows very strong support.
And this bounce back is coming, as was previously mentioned last segment, amongst net outflows, amongst the ETFs due to Grayscale. So we really believe that this is Bitcoin showing quite a bit of resilience amongst a risk environment is how we're perceiving it. So we're feeling like good things are ahead for Bitcoin.
BRAD SMITH: What do you make of those outflows due to Grayscale, Zach?
ZACH BRADFORD: I view it as who wants to stay in the ETF that has the highest fees. It's just capitalism at its finest, where the outflows are going, we believe, into other avenues, probably, to lower fees. But because settlements in ETFs are sometimes t plus 1, t plus 2, t plus 3, there's always a delay in how the capital is moving.
And we think a little bit is finding its way into the Bitcoin miners, as we are at some lower points for the year to date. And, hopefully, there's some people seeing opportunities there.
SEANA SMITH: Zach, let's talk about what specifically this means for your business, what it means for some of the other Bitcoin miners up on the screen, because when this halving takes place, you're, essentially, getting about half of what it is right now. So talk to us just about the impact that this has on your business in the short-term versus the long-term, and why you're still seeing that long-term view as more of an opportunity.
ZACH BRADFORD: We're actually pretty excited. An important thing to understand is, this is about the elegance of the Bitcoin network itself. And we've all known that this was coming for four years. And so large scale miners, like ourselves that have been able to plan for this, are, actually, set to get a bigger piece of the pie.
Because, although, we will go from about 900 Bitcoin, new Bitcoin a day being produced, to 450, what that means is the efficient miners who have good solid margins will continue to have margins that are very healthy.
But miners that were maybe smaller, didn't have scale, or were inefficient when it comes to their energy usage, therefore, their costs are higher, they won't be able to keep running their machines. And as a result, there will be less participants taking a piece of the pie. And, therefore, the large miner, our piece of the pie should get bigger after halving.
We think to the tune of 10%, 15%, or even 20%.
BRAD SMITH: And so that's looking at your share of production. Even as we think about, though, the halving and the costs to mine now essentially aren't your costs to mine doubling in comparison to what the output or the productivity in the amount of Bitcoin that you're producing is?
ZACH BRADFORD: No. You're, absolutely, right. Our costs will double, which is why it's so important we prepared to where our margins are well above 50%. So when this happens, our margins may go from 70% to 35%. But, again, we expect to see that change and adjustment happen, where we'll regain at least a piece of that.
But in addition to that, we think on a long-term basis, Bitcoin was built this way to create additional scarcity. We know exactly how many Bitcoin there's going to be in the future. And as a result, that should create an economic supply shock at some point in the cycle. And the cycle is continually repeated itself.
So we think, again, Bitcoin will continue to go up. And so, although, our margins may decrease from today to tomorrow, we think on a long-term view, they regain that space and are even better, as Bitcoin goes up into the next bull market, which we believe we're just at the beginning of.
BRAD SMITH: Would you be buyers of any operations that might have to sunset as a result of the market share that you were talking about you have and the production capacity that companies like CleanSpark have?
ZACH BRADFORD: Absolutely. We've been very active in the M&A space for the last several years. And we see this halving event creating a buying opportunity. Because something that's important is their servers may no longer be profitable because they're not energy efficient, or they're not run well. But we have done a great job. We've got two sites in the last four years that we were able to take from a less efficient operation to a highly efficient operation by upgrading the servers, by training the personnel better.
So we're actually looking for opportunities right now. We have many, many that we're looking at. And we expect that that will continue to increase in the coming months, as we see additional slippages or failures of other companies. We see a big opportunity for us to step in, acquire at the cheap, hopefully, and then rebuild it back to a better, stronger business, as part of our portfolio.
SEANA SMITH: All right, Zach Bradford, CEO of CleanSpark. We appreciate you taking the time and joining us here on "Yahoo Finance" ahead of the halving.
