According to CoinDesk, JPMorgan said in a research report on Wednesday (5th) that hyperscale cloud service providers (Hyperscaler) and artificial intelligence (AI) companies are exploring different alternatives to meet their energy needs. This could make Bitcoin (BTC) mining companies with favorable power contracts attractive acquisition targets.
M&A activity in the mining space is heating up following the Bitcoin halving. On Tuesday, cloud computing company CoreWeave signed a 200 MW AI agreement with Bitcoin mining company Core Scientific. According to reports, the mining company also made an all-cash offer to acquire the company, and the company's stock price subsequently rose sharply. . Meanwhile, another major Bitcoin miner, Riot Platforms, also made a hostile takeover bid for its rival Bitfarms last month. According to Reuters, Riot Platforms has announced today that it has acquired a 12% stake in Bitfarms.
JPMorgan said in a report that the deal with CoreWeave validates and could accelerate the crypto mining industry’s participation in high-performance computing (HPC). Within the investment bank's coverage, Core Scientific's news has the greatest impact on Australian mining company Iris Energy, which has an Overweight rating. JP Morgan said Iris Energy was an early entrant into high-performance computing and has the rights to develop more than 2 GW of power.
JPMorgan said the deal could increase "the valuation floor for sub-scale miners as a new group of buyers (hyperscale cloud service providers) emerges." The investment bank added that this could contribute to the "rationalization of the Bitcoin network" by shifting power capacity away from miners, thereby improving the profits of remaining players.
JPMorgan estimates that U.S.-listed Bitcoin miners consume up to 5 GW of electricity and have access to another 2.5 GW, "making them a potentially attractive target."
Additionally, some Bitcoin miners are facing financial pressure to exit the market following the recent halving event and may therefore be more receptive to transactions. Brokerage firm Bernstein said last week that Riot Platforms is in the best position to try to consolidate the mining space because the miner has the financial capacity to make the deal.
Related reports: "JPMorgan Chase: Bitcoin mining costs have been reduced from US$50,000 to US$45,000" "Bitcoin halving has prompted a large number of old mining machines to move out of the United States, mainly to Africa and South America" "Cantor Fitzgerald Report: 11 Listed mining companies may find it difficult to profit from mining operations after Bitcoin halving》
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