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JPMorgan highlighted in a recent research report that Bitcoin (BTC) mining companies with attractive energy contracts could make interesting acquisition targets. This comes at a time when hyperscalers and artificial intelligence (AI) companies are exploring different alternatives to secure their energy needs.
The mining industry is witnessing a surge in mergers and acquisitions, especially after the Bitcoin halving. Shares of Core Scientific (CORZ) rose on Tuesday after cloud computing firm CoreWeave signed a 200-megawatt (MW) AI deal with Bitcoin mining. CoreWeave has also reportedly made an all-cash offer to acquire the company. In another development, Riot Platforms (RIOT), another major Bitcoin miner, made an aggressive bid to acquire peer Bitfarms (BITF) last month.
According to JPMorgan, Core Scientific news will be most impactful for Iris Energy (IREN), which is an early adopter of HPC and has rights to develop over 2 gigawatts (GW) of power.
JPMorgan suggests that this deal could raise the “valuation base for subscale mining operators” as a new customer class, Hyperscalers, emerges. The bank also added that it could help “rationalize the Bitcoin network” by shifting power capacity away from miners, thus increasing the profits of the remaining operators.
The bank estimates that US-listed Bitcoin miners draw up to 5 GW of power and have access to an additional 2.5 GW, making them potentially attractive targets. Additionally, some Bitcoin miners who are under financial pressure to exit the market following the recent halving event may be more open to a deal.
*This is not investment advice.
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