Bitcoin

Bitcoin miners with attractive energy contracts are potential M&A targets, says JPMorgan

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8 months ago

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  • Energy demand from hyperscalers and AI companies could make bitcoin mining companies potential acquisition targets, the bank said.

  • JPMorgan said CoreWeave’s deal with Core Scientific validates the mining industry’s shift to HPC.

  • The report said that bitcoin miners under financial pressure after the recent halving may be more susceptible to a deal.

Hyperscalers and artificial intelligence (AI) companies are exploring different alternatives to secure their energy needs, and this could make bitcoin {{BTC}} mining companies with attractive energy contracts attractive acquisition targets, said JPMorgan (JPM ) in a research report on Wednesday.

A hyperscaler is a large-scale data center that specializes in delivering large amounts of computing power.

Mergers and acquisitions are heating up in the mining sector, after the halving. On Tuesday, shares of Core Scientific (CORZ) rose higher after cloud computing company CoreWeave signed a 200 megawatt (MW) artificial intelligence deal with the bitcoin miner, and it was also reported to have made an offer to buy the company in an all-cash deal. Meanwhile, another major bitcoin miner, Riot Platforms (RIOT), made a hostile offer to buy Bitfarms (BITF) last month.

See more information: Bitcoin Halving Is Poised to Trigger Darwinism in Miners

The deal with CoreWeave validates and could accelerate the mining industry’s involvement in high-performance computing (HPC), JPMorgan said in the report. Within the bank’s coverage, the Core Scientific news is most impactful for overweight Iris Energy (IREN), which it says was early to adopt HPC and has the right to develop more than 2 gigawatts (GW) of energy.

JPMorgan said this deal could increase the “minimum value for subscale mining operators as a new class of buyers (Hyperscalers) emerges.” The bank also added that it could help “rationalize the Bitcoin network” by moving power capacity away from miners, which would improve profits for remaining operators.

The bank estimates that US-listed bitcoin miners consume up to 5 GW of power and have access to an additional 2.5 GW, “making them a potentially attractive target.”

Additionally, some bitcoin miners are under financial pressure to exit the market following the recent halving and therefore may be more receptive to a deal, the report added.

Broker Bernstein said last week that Riot Platforms (RIOT) was better positioned to try to consolidate the mining sector, as the miner has the financial capacity to do business.

See more information: Riot Platforms is best suited to consolidate the Bitcoin mining sector: Bernstein

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