According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscalers and AI 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. This week, 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 company Riot Platforms made a hostile takeover bid for 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 accelerate the participation of the crypto mining industry in high-performance computing (HPC). Within the research scope of the investment bank, the news of Core Scientific had the greatest impact on Australian mining company Iris Energy, which JPMorgan referred to as an early entrant in high-performance computing and has the right to develop over 2 GW of power.
JPMorgan stated that this deal 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 profitability of 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.
Furthermore, some Bitcoin miners are facing financial pressure to exit the market after the recent halving event, making them more likely to accept deals. Bernstein brokerage firm stated last week that Riot Platforms is in the best position to consolidate the mining sector as the miner has the financial capability to carry out transactions.
Related reports: “JPMorgan: Bitcoin mining costs have been reduced from $50,000 to $45,000” “A large number of old mining machines are moving out of the US post Bitcoin halving, primarily to Africa and South America” “Cantor Fitzgerald report: 11 publicly listed mining companies may struggle to profit from mining operations post Bitcoin halving”
