According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscale cloud service providers and artificial intelligence companies are exploring different alternative solutions to meet their energy needs, which could make bitcoin mining companies with advantageous power contracts attractive acquisition targets.
Mergers and acquisitions in the mining sector are heating up after the Bitcoin halving. On 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 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 of Core Scientific has the greatest impact on Iris Energy, an Australian mining company with a buy rating, as JPMorgan named Iris Energy as an early player in high-performance computing and capable of developing over 2 GW of power.
JPMorgan stated that this transaction could raise the valuation floor for “secondary-scale miners” as a new buyer group (hyperscale cloud service providers) has emerged. The 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 use an additional 2.5 GW, making them potential attractive targets.
Additionally, some bitcoin miners are facing financial pressure 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 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 Exodus of Old Mining Machines from the US, Mainly to Africa and South America” “Cantor Fitzgerald Report: 11 Listed Mining Companies May Struggle to Profit from Mining Business after Bitcoin Halving”
