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 favorable power contracts attractive acquisition targets.
M&A activities in the mining sector are heating up after the Bitcoin halving. This Tuesday, cloud computing company CoreWeave and bitcoin mining enterprise Core Scientific signed a 200 MW AI agreement. It was reported that the mining company also made a cash offer to acquire the company, leading to a significant increase in its stock price. Meanwhile, another large bitcoin mining enterprise, Riot Platforms, made a hostile acquisition offer to its competitor Bitfarms last month. According to Reuters, Riot Platforms announced today the acquisition of a 12% stake in Bitfarms.
JPMorgan stated in the report that the transaction with CoreWeave could accelerate the participation of the crypto mining industry in high-performance computing (HPC). In the research scope of the investment bank, Core Scientific’s news had the greatest impact on the Australian mining company Iris Energy, which has a “buy” rating. JPMorgan referred to Iris Energy as an early participant in high-performance computing and has the right to develop over 2 GW of power.
JPMorgan said that this deal could raise the valuation baseline for “secondary-scale miners” as a new buyer group (hyperscale cloud service providers) emerges. 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 enterprises in the U.S. consume up to 5 GW of power and could use an additional 2.5 GW, making them potential attractive targets.
Furthermore, some bitcoin mining companies are facing financial pressures to exit the market after the recent halving event, making them more willing to accept deals. 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 capability to make transactions.
Related reports: “JPMorgan: Bitcoin mining costs have been reduced from $50,000 to $45,000”, “Bitcoin halving prompts a large number of old mining machines to move out of the U.S., mainly to Africa and South America”, “Cantor Fitzgerald report: 11 publicly listed mining companies may struggle to profit from mining operations after the Bitcoin halving”.
