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 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 significant increase in its stock price. Meanwhile, another large bitcoin mining company, Riot Platforms, recently made a hostile takeover offer to its competitor Bitfarms. Reuters reported that Riot Platforms has announced the acquisition of a 12% stake in Bitfarms today.

JPMorgan stated in the report that the deal with CoreWeave could 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 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 entrant into high-performance computing and with the right to develop over 2 GW of power.

JPMorgan expressed that this transaction could raise the valuation baseline of 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 profits of the remaining operators.

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

Furthermore, some bitcoin miners are facing financial pressure to exit the market following 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 capacity to engage in transactions.

Related reports: “JPMorgan: Bitcoin mining costs have decreased from $50,000 to $45,000” “Bitcoin halving prompts mass exodus of old mining machines from the US, primarily to Africa and South America” “Cantor Fitzgerald report: 11 listed mining companies may struggle to profit from mining operations after Bitcoin halving”