Key Takeaways
- Bitcoin miners with significant power contracts are attractive acquisition targets.
- CoreWeave's deal with Core Scientific exemplifies the trend towards HPC in mining.
- Miners struggling financially post-halving may be more receptive to M&A offers.
Bitcoin miners with extensive power contracts are becoming attractive acquisition targets for hyperscalers and AI firms, according to a recent report by JPMorgan.
The bank highlighted that these sectors’ increasing power demands could drive mergers and acquisitions within the bitcoin mining industry.
JPMorgan pointed to CoreWeave’s recent agreement with Core Scientific as a validation of the mining sector’s shift towards high-performance computing (HPC).
This deal saw CoreWeave sign a 200-megawatt (MW) AI contract with the bitcoin miner and subsequently offer to buy the company in an all-cash deal. Similarly, Riot Platforms recently made a hostile bid to acquire Bitfarms, indicating rising consolidation activity post-halving.
The report noted that miners under financial strain from the recent halving may be more inclined to consider acquisition offers. JPMorgan emphasized that such deals could elevate the valuation floor for smaller mining operators by introducing new buyers, such as hyperscalers. Additionally, shifting power capacity from miners could enhance the profitability of the remaining operators.
JPMorgan estimates that U.S. listed bitcoin miners currently utilize up to 5 gigawatts (GW) of power with access to an additional 2.5 GW. This substantial power capacity makes them particularly appealing targets. Broker Bernstein echoed this sentiment, identifying Riot Platforms as well-positioned for sector consolidation due to its financial capability.
