Bitcoin Miners: Hot Targets for Hyperscalers and AI Firms

A recent JPMorgan research report suggests that U.S. listed Bitcoin mining companies, with their significant power resources, are becoming attractive acquisition targets for hyperscalers and AI firms. These firms are actively seeking reliable energy sources, and bitcoin miners with favorable power contracts fit the bill, making them appealing for potential takeovers. Hyperscalers are large-scale data centers that provide substantial computing power.

The report highlights a surge in mergers and acquisitions within the bitcoin mining sector, particularly after the recent halving event. For instance, Core Scientific (CORZ) experienced a significant share price increase following a 200-megawatt AI agreement with cloud computing company CoreWeave. Additionally, CoreWeave reportedly offered to acquire Core Scientific in an all-cash deal. Another notable development is Riot Platforms (RIOT) making a hostile bid to acquire fellow miner Bitfarms (BITF) last month. These moves signal the mining sector’s growing involvement in high-performance computing (HPC), according to JPMorgan.

Among the companies JPMorgan covers, Iris Energy (IREN), which has been proactive in adopting HPC and holds rights to develop over 2 gigawatts of power, stands to be particularly affected by these developments. JPMorgan believes this trend could elevate the valuation of smaller mining operators as hyperscalers emerge as a new class of buyers. This shift could also help streamline the Bitcoin network by reallocating power capacity away from miners, thereby increasing the profitability of the remaining operators.

The report estimates that U.S. listed Bitcoin miners currently utilize up to 5 gigawatts of power and have access to an additional 2.5 gigawatts. This substantial power capacity makes them attractive targets for acquisition. Moreover, some Bitcoin miners are under financial strain due to the recent halving event, making them more open to potential deals.

Additionally, broker Bernstein noted that Riot Platforms (RIOT) is well-positioned to lead consolidation in the mining sector, given its financial strength and capacity for deal-making. This confluence of factors suggests a dynamic period ahead for the Bitcoin mining industry, driven by strategic acquisitions and evolving energy needs.

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