Bitcoin Mining Stocks Soar Amid Takeover Frenzy

As an analyst, I’ve noticed significant price increases in the shares of Stronghold (SDIG), Core Scientific, TeraWulf (WULF), Iris Energy (IREN), Mawson (MIGI), and Cathedra (CBIT). Stronghold, Core Scientific, and TeraWulf experienced surges exceeding 15%, while Iris Energy, Mawson, and Cathedra saw gains of more than 10%.

Lately, Riot Platforms (RIOT), one of the biggest mining companies, has initiated a hostile takeover bid for its peer, Bitfarms (BITF. In contrast, CoreWeave, an artificial intelligence firm, announced plans to acquire another major miner, CoreScientific (CORZ).

The rejection of takeover bids by Bitfarms and CoreScientific has prompted a reminder amongst investors that the Bitcoin mining sector could be ripe for consolidation.

According to B. Riley analyst Lucas Pipes, power supply contracts and reduced valuations may serve as the trigger for the mergers and acquisitions trend in the mining industry.

In his report, he expressed the belief that the optimistic viewpoint towards the power market may spark more mergers and acquisitions (M&A) in 2023. This is largely due to the significant differences in appraisals that currently exist.

As a crypto investor, I’ve noticed the analysts at JPMorgan sharing similar views with Pipes. They believe that companies in the AI and cloud computing sectors might be drawn to bitcoin miners as they search for diverse power sources. The bank also hinted that some miners could be considering leaving the market post-Bitcoin halving, which reduced rewards for mining and put pressure on weaker players. Consequently, mergers and acquisitions (M&A) in the mining industry are expected to gain momentum.

Two Wall Street firms have stated that larger mining companies, including Riot and Marathon Digital (MARA), are most likely to spearhead the ongoing wave of consolidation in the industry.