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Bitcoin miners with attractive energy contracts are potential M&A targets, JPMorgan says
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Demand for energy from hyperscalers and artificial intelligence firms could make bitcoin mining companies potential takeover targets, the bank said.
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JPMorgan said CoreWeave’s deal with Core Scientific validates the mining industry’s focus on HPC.
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The report says bitcoin miners under financial pressure following the recent halving may be more amenable 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 takeover targets, JPMorgan said (JPM ) in a research report on Wednesday.
A hyperscaler is a large-scale data center that specializes in providing massive amounts of computing power.
Mergers and acquisitions are heating up in the mining sector, post-halving. Core Scientific (CORZ) stock Tuesday climbed higher after cloud computing firm CoreWeave signed a 200 megawatt (MW) artificial intelligence deal with the bitcoin miner, and is also said to have made an offer to buy the company in an all-cash deal. Meanwhile, another large bitcoin miner, Riot Platforms (RIOT), has made a hostile offer to buy peer Bitfarms (BITF) last month.
To know more: Bitcoin halving is poised to unleash Darwinism among miners
The deal with CoreWeave validates and could accelerate the mining sector’s involvement in high-performance computing (HPC), JPMorgan said in the report. As part of the bank’s coverage, Core Scientific’s news has a bigger impact on overweight Iris Energy (IREN), which it says was early to embrace HPC and has the rights to develop more than 2 gigawatts ( GW) of power.
JPMorgan said this deal could increase “the valuation base for small-scale mining operators, as a new class of buyers (Hyperscalers) has emerged.” The bank also added that it could help “streamline 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 draw up to 5 GW of energy 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 adds.
Broker Bernstein said last week that Riot Platforms (RIOT) is the company best placed to try to consolidate the mining sector, as the miner has the financial capacity to strike deals.
To know more: Riot platforms are best suited to consolidate Bitcoin mining sector: Bernstein