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Bitcoin Miners With Attractive Power Contracts Are Potential M&A Targets, JPMorgan Says

Jun 4, 2024
    Power demand from hyperscalers and AI firms may make bitcoin mining companies potential takeover targets, the bank said.JPMorgan said CoreWeave’s deal with Core Scientific validates the mining sector’s pivot to HPC.The report said that bitcoin miners under financial pressure following the recent halving may be more susceptible to a deal.
As a seasoned crypto investor with a keen interest in the Bitcoin mining industry, I find JPMorgan’s latest report on the potential acquisition of Bitcoin mining companies by hyperscalers and AI firms intriguing. The recent deal between CoreWeave and Core Scientific is a significant validation of the mining sector’s pivot to high-performance computing (HPC), and it could potentially set off a wave of mergers and acquisitions in the industry.As a crypto investor, I’ve noticed the increasing focus of hyperscalers and AI firms on finding sustainable energy solutions for their operations. This trend could make bitcoin mining companies with attractive power contracts all the more valuable targets for acquisitions. According to JPMorgan’s latest research report, released on Wednesday, these mining companies may become even more appealing due to their energy advantages.

As a data center analyst, I would describe a hyperscale facility as a large-scale data processing hub designed to deliver massive computing resources.

As a researcher studying trends in the mining sector, I’ve noticed an uptick in mergers and acquisitions following the halving event. On Tuesday, shares of Core Scientific (CORZ) spiked after news broke that cloud computing firm CoreWeave had signed a 200 MW AI deal with the bitcoin miner and was reportedly making an all-cash offer to buy the company. Meanwhile, Riot Platforms (RIOT) made a hostile bid to acquire peer Bitfarms (BITF) last month.

As a crypto investor, I’d interpret JPMorgan’s report on CoreWeave as follows: The validation of the mining sector’s role in high-performance computing (HPC) through CoreWeave could bring about faster adoption and growth in this area. Among the companies within my investment coverage, Iris Energy (IREN) stands out as particularly noteworthy. This overweight-rated stock was an early adopter of HPC and holds rights to develop more than 2 gigawatts (GW) of power, making it a prime beneficiary of this trend.

As a researcher studying the impact of tech giants, or Hyperscalers, on the mining industry, I would interpret JPMorgan’s statement as follows: This deal could establish a minimum market value for smaller-scale mining operators by attracting new buyers in the form of Hyperscalers. Furthermore, this transaction might contribute to optimizing the bitcoin network by transferring some power capacity away from miners, ultimately boosting the earnings of the surviving operators.

Experts estimate that the total power consumption of U.S.-listed bitcoin mining operations could reach as high as 5 gigawatts. Moreover, these miners may have access to an extra 2.5 gigawatts of power, making them a significant and alluring prospect.

As a Bitcoin investor, I can tell you that some miners in the network might be considering leaving the market due to financial stress brought about by the latest halving event. This situation could potentially make them more open to negotiation or partnership opportunities.

Last week, broker Bernstein expressed the view that among all mining companies, Riot Platforms (RIOT) is most likely to spearhead industry consolidation due to its substantial financial resources enabling it to engage in mergers and acquisitions.

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2024-06-05 20:34