Should you buy CleanSpark’s stock instead of Bitcoin?

In the realm of cryptocurrency investments, CleanSpark Inc (NASDAQ:CLSK) has emerged as a compelling contender. Specializing in Bitcoin mining across the Americas, CleanSpark distinguishes itself by operating data centers powered predominantly by low-carbon energy sources. Amidst a backdrop of soaring interest in cryptocurrencies, CleanSpark’s stock has surged by a staggering 310% over the past year, outpacing Bitcoin’s 152% appreciation during the same period.

CLSK vs BTCUSD chart by TrdaingView

Business dynamics & expansion strategies

CleanSpark’s recent financial performance underscores its upward trajectory in the burgeoning bitcoin mining sector. The company reported a remarkable second-quarter performance, with a GAAP EPS of $0.58 and revenues reaching $111.8 million, marking a substantial 163.1% year-over-year increase.

This growth is driven by CleanSpark’s strategic acquisitions, expanding its operational capacity and enhancing its position in the competitive mining landscape. One notable stride in CleanSpark’s expansion journey is its recent agreement to acquire two bitcoin mining sites in Wyoming, boasting a combined power capacity of 75 MW.

This strategic move, facilitated by an $18.75 million cash payment, is poised to augment CleanSpark’s mining capabilities, projecting an addition of over four exahashes per second (EH/s) once fully operational. Such acquisitions underscore CleanSpark’s proactive approach to fortify its position in the evolving crypto market.

Navigating the halving hurdle

The recent Bitcoin halving event, which reduced the reward for mining new Bitcoin by half, has presented challenges and opportunities for companies like CleanSpark. Despite the decline in mining rewards, CleanSpark’s strategic acquisitions and focus on efficiency position it well to navigate the post-halving environment.

While CleanSpark’s stock has demonstrated impressive growth, some analysts remain cautious about its long-term viability. Concerns surrounding the fundamental economics of Bitcoin mining, compounded by valuation metrics, should prompt investors to carefully consider the risks and rewards associated with CleanSpark’s stock.

As investors weigh CleanSpark’s stock against the appeal of Bitcoin, it’s crucial to consider both fundamental factors and technical indicators. So, let’s dive into the charts to analyze the stock’s potential price movements and market sentiment. By examining the price data closely, we can determine whether CleanSpark’s meteoric rise is poised to continue, or if Bitcoin will end up being the more lucrative investment.

Timing the trade: CleanSpark’s stock strategy insights

CleanSpark’s stock surged dramatically from under $4 to over $24, a sixfold increase, between November 2023 and March 2024. However, it has since retraced some gains and currently hovers around $17.5. Despite this pullback, the stock maintains an upward trend in both medium and long-term charts.

CLSK chart by TradingView

Considering CleanSpark’s previous peak of $42.6 in January 2021, there appears to be room for further growth. Bullish investors may consider accumulating stock at current levels, setting a stop loss near the recent swing low at $13.55. If the stock surpasses its recent high above $24, it could encounter resistance around $26.95, providing an opportunity for short-term traders to take profits.

For bearish traders, it’s prudent to avoid shorting the stock at current levels and instead wait for it to drop below $13.50 or rise above $21.6. A breakout above $21.6 might present a low-risk, high-reward short trade opportunity, with a stop loss at $24.8 and a profit target near $13.5.

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