JPMorgan Chase Bitcoin Mining Companies with Favorable Power Contracts as Potential Acquisition Targets

According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscalers and AI companies are exploring different alternative solutions to meet their energy needs, which may make bitcoin (BTC) mining companies with favorable power contracts attractive acquisition targets.

Mergers and acquisitions in the mining sector are heating up after the Bitcoin halving. This Tuesday, cloud computing company CoreWeave signed a 200 MW AI agreement with bitcoin mining company Core Scientific. It was reported that the mining company also made a cash offer to acquire the company, leading to a sharp increase in the company’s stock price. Meanwhile, another large bitcoin mining company, Riot Platforms, made a hostile takeover offer to its competitor Bitfarms last month. According to Reuters, Riot Platforms announced today the acquisition of a 12% stake in Bitfarms.

JPMorgan stated in the report that the transaction with CoreWeave could accelerate the participation of the cryptocurrency mining industry in high-performance computing (HPC). Within the scope of the investment bank’s research, the news from Core Scientific had the greatest impact on Iris Energy, an Australian mining company with a hold rating. JPMorgan referred to Iris Energy as an early player in high-performance computing and with the right to develop over 2 GW of power.

JPMorgan stated that this transaction could raise the valuation floor for “secondary scale miners” as a new buyer group (hyperscalers) has emerged. The investment bank also added that by transferring power capacity away from miners, this could help “rationalize the Bitcoin network” and improve the profitability of remaining operators.

JPMorgan estimated that publicly-listed bitcoin mining companies in the US consume up to 5 GW of power and could use an additional 2.5 GW, making them a potentially attractive target.

Additionally, some bitcoin miners are facing financial pressure to exit the market after the recent halving event, making them more likely to accept transactions. Bernstein brokerage firm stated last week that Riot Platforms is in the best position to consolidate the mining sector, as the miner has the financial capacity to engage in transactions.

Related reports: “JPMorgan: Bitcoin mining costs have been lowered from $50,000 to $45,000” “Large numbers of old mining machines move out of the US after the Bitcoin halving, mainly to Africa and South America” “Cantor Fitzgerald report: 11 publicly-listed mining companies may struggle to profit from mining operations after the Bitcoin halving”