According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscalers and artificial intelligence (AI) companies are exploring different 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 and bitcoin mining company Core Scientific signed a 200 MW AI agreement, with reports that the mining company also made a cash offer to acquire the company, resulting in a significant 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 reports by Reuters, Riot Platforms announced today the acquisition of a 12% stake in Bitfarms.
JPMorgan stated in the report that the transaction with CoreWeave could possibly accelerate the participation of the cryptocurrency mining industry in high-performance computing (HPC). Within the scope of the investment bank’s research, Core Scientific’s news had the greatest impact on the buy rating for Australian mining company Iris Energy, as JPMorgan referred to Iris Energy as an early entrant into high-performance computing and has 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 shifting power capacity away from miners, this could help in “rationalizing the bitcoin network,” improving profits for the remaining operators.
JPMorgan estimated that publicly listed bitcoin mining companies in the US consume up to 5 GW of power, with an additional 2.5 GW available, making them a potentially attractive target.
Furthermore, some bitcoin miners are facing financial pressure to exit the market after the recent halving event, making them more open to transactions. Brokerage firm Bernstein 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 Reduced from $50,000 to $45,000” “Large Number of Old Mining Machines Moved out of the US After Bitcoin Halving, Mainly to Africa and South America” “Cantor Fitzgerald Report: 11 Public Mining Companies May Struggle to Profit from Mining Business After Bitcoin Halving”
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