According to CoinDesk, Riot Platforms (RIOT), a prominent bitcoin miner, is set to consolidate the bitcoin mining sector. The company, based in Colorado, has the financial capacity to do so, with no debt and over $1.3 billion in cash and bitcoin on its balance sheet. Riot is currently in the process of acquiring Bitfarms (BITF), a rival bitcoin miner, after purchasing a 9.25% stake in the company. Riot has offered to buy all outstanding shares in Bitfarms for $2.30 per share.
Analysts Gautam Chhugani and Mahika Sapra note that the bitcoin mining business is becoming increasingly challenging for smaller players who lack the capital to compete in the global hash power race. The report suggests that the U.S. bitcoin mining sector is likely to consolidate to around five major players who will control a significant capacity. Currently, there are over 20 publicly listed miners.
The report also highlights that smaller miners are attracting interest from AI data centers looking to purchase sites. It suggests that the largest bitcoin miners should increase their M&A activities to maintain long-term strategic relevance. The authors of the report see bitcoin miners as a strategic asset controlling power, land, and significant operating capabilities in running data centers, especially if power becomes the biggest constraint to scale up artificial intelligence computation.
Bernstein, the broker, has given an outperform rating on Riot shares with a $22 price target. At the time of the report, the shares were trading around $10.30.