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

According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscalers and artificial intelligence companies are exploring different alternative solutions to meet their energy needs, which could make bitcoin 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, reportedly receiving a full cash acquisition offer from the mining company, leading to a surge in its 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 12% of Bitfarms’ shares.

JPMorgan stated in the report that the transaction with CoreWeave could validate and potentially accelerate the participation of the crypto mining industry in high-performance computing (HPC). Within the scope of the investment bank’s research, the news about Core Scientific had the biggest impact on Iris Energy, an Australian mining company with a buy rating from JPMorgan. JPMorgan referred to Iris Energy as an early entrant into high-performance computing and with the rights to develop over 2 GW of power.

JPMorgan stated that this transaction could raise the valuation floor for “secondary scale miners” as a new group of buyers (hyperscalers) has emerged. The investment bank also added that by shifting power capacity away from miners, this could help “rationalize the bitcoin network,” thereby improving the profits of remaining operators.

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

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

Related reports: “JPMorgan: Bitcoin Mining Costs Reduced from $50,000 to $45,000” “Bitcoin Halving Leads to Large Number of Old Mining Machines Moving out of the US, Mainly to Africa and South America” “Cantor Fitzgerald Report: 11 Public Mining Companies May Struggle to Profit from Mining Business After Bitcoin Halving”