According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscalers and AI companies are exploring alternative solutions to meet their energy needs, which could make bitcoin mining companies with favorable power contracts an attractive acquisition target.
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 cash offer for acquisition, leading to a surge in the company’s stock price. Additionally, another large bitcoin mining company, Riot Platforms, made a hostile takeover bid for its competitor Bitfarms last month. According to Reuters, Riot Platforms announced the acquisition of 12% of Bitfarms’ shares today.
JPMorgan’s report suggests that the transaction with CoreWeave could accelerate the participation of the cryptocurrency mining industry in high-performance computing (HPC). Within the scope of the bank’s research, Core Scientific’s news had the biggest impact on Iris Energy, an Australian mining company with a hold rating, as JPMorgan called Iris Energy an early player in high-performance computing with the right 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 group of buyers (hyperscalers) has emerged.” The bank also added that by transferring power capacity away from miners, this could help “rationalize the bitcoin network,” thereby improving the profits of remaining operators.
JPMorgan estimates 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 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. 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 engage in transactions.
Related reports: “JPMorgan: Bitcoin mining costs reduced from $50,000 to $45,000” “Bitcoin halving prompts large number of old mining machines to move out of the US, primarily to Africa and South America” “Cantor Fitzgerald Report: 11 listed mining companies may struggle to profit from mining operations after Bitcoin halving”