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

The bank said power demand from hyperscalers and artificial intelligence firms could make Bitcoin mining companies potential takeover targets.

JPMorgan said CoreWeave’s deal with Core Scientific confirms the mining industry’s shift towards HPC.

The report stated that Bitcoin miners, who were under financial pressure after the last halving, may be more receptive to a deal.

Hyperscalers and artificial intelligence (AI) firms are exploring different alternatives to secure their energy needs, which could make Bitcoin {{BTC}} mining companies with attractive energy contracts attractive acquisition targets, JPMorgan (JPM) said in a research report on Wednesday.

A hyperscaler is a large-scale data center that specializes in delivering large amounts of computing power.

Following the halving, mergers and acquisitions are heating up in the mining industry. On Tuesday, Core Scientific (CORZ) shares rose after cloud computing company CoreWeave reportedly signed a 200 megawatt (MW) AI deal with the bitcoin miner and also made an offer to acquire the company in an all-cash manner. to agree. Meanwhile, Riot Platforms (RIOT), another major bitcoin miner, made a hostile bid to acquire peer Bitfarms (BITF) last month.

Read more: Bitcoin Halving Prepares to Attack Darwinism on Miners

The deal with CoreWeave validates and could accelerate the mining industry’s involvement in high-performance computing (HPC), JPMorgan said in the report. Within the bank’s scope, the Core Scientific news is the most impactful for overweight Iris Energy (IREN), which is said to be early to embrace HPC and has rights to develop over 2 gigawatts (GW) of power.

JPMorgan said this deal “could raise the valuation base for subscale mining operators as a new class of buyers (Hyperscalers) emerges.” The bank also added that it could help “rationalize the bitcoin network” by shifting power capacity away from miners, which would increase profits for the remaining operators.

The bank estimates that U.S.-listed bitcoin miners draw up to 5 GW of power and have access to an additional 2.5 GW, making them a potentially attractive target.

Additionally, the report noted that some bitcoin miners are under financial pressure to exit the market following the recent halving event and may therefore be more open to a deal.

Broker Bernstein said last week that Riot Platforms (RIOT) is best positioned to consolidate the mining industry because the miner has the financial capacity to make deals.

Read more: Riot Platforms Best Suited to Solidify the Bitcoin Mining Industry: Bernstein