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 hyperscale cloud service providers and artificial intelligence (AI) companies are exploring alternative solutions to meet their energy needs, which could 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, 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, made a hostile takeover offer to its competitor Bitfarms last month. According to Reuters, Riot Platforms has announced the acquisition of a 12% stake in Bitfarms today.

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

JPMorgan stated that this deal could raise the valuation floor for “secondary-scale mining operators, as a new buyer group (hyperscale cloud service providers) has emerged.” The investment bank also added that by shifting power capacity away from miners, this could help “rationalize the bitcoin network” and improve 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 an additional 2.5 GW, making them potential attractive targets.

Furthermore, some bitcoin miners are facing financial pressures to exit the market after the recent halving event, making them more likely to accept transactions. Brokerage firm Bernstein stated last week that Riot Platforms is in the best position to integrate the mining sector, as the miner has the financial capacity to carry out transactions.

Related reports: “JPMorgan: Bitcoin mining costs have dropped from $50,000 to $45,000” “Bitcoin halving prompts a large number of old mining machines to move out of the US, mainly to Africa and South America” “Cantor Fitzgerald report: 11 listed mining companies may struggle to profit from mining operations after Bitcoin halving”