Will AI Companies and Data Centers Massively Acquire Bitcoin Mining Enterprises? JPMorgan: They Desperately Need Cheap Electricity

In a report released on Wednesday, JPMorgan indicated that U.S.-listed Bitcoin mining enterprises possess substantial electricity resources, making them potential acquisition targets for hyperscale data centers and AI companies.

According to Coindesk, the JPMorgan report stated:

"Hyperscale data centers and AI companies are exploring various alternatives to meet their electricity needs, which might make Bitcoin mining enterprises with attractive electricity contracts potential acquisition targets."

The bank estimates that U.S.-listed Bitcoin mining enterprises consume up to 5 GW (gigawatts, 1 billion watts) of electricity, with an additional 2.5 GW available, making them appealing potential acquisition targets.

Additionally, following the fourth Bitcoin halving completed in April, the block reward has further decreased from 6.25 BTC to 3.125 BTC, leading some Bitcoin mining enterprises facing financial pressure to be more inclined to accept acquisition offers.

Mergers and Acquisitions Surge Post-Halving The report also noted that merger and acquisition activity in the mining sector is heating up post-halving. This week, U.S.-listed Bitcoin mining and hosting service provider Core Scientific announced a 12-year partnership agreement with cloud computing solutions provider CoreWeave. Core Scientific plans to provide 200 MW (megawatts) of infrastructure, with the agreement expected to generate over $3.5 billion in cumulative revenue for the mining company. Bloomberg revealed that insiders claim CoreWeave has made an all-cash offer of approximately $1 billion, equivalent to $5.75 per share, to acquire Core Scientific.

Another major U.S.-listed Bitcoin mining enterprise, Riot Platforms (RIOT), proposed an acquisition offer to fellow miner Bitfarms (BITF) last month, but it was rejected. Bitfarms claimed it was severely undervalued and had received more acquisition interest from other parties.

JPMorgan stated in the report that the deal between Core Scientific and CoreWeave could accelerate the cryptocurrency mining sector's move into high-performance computing (HPC) businesses, while noting:

With the emergence of a new class of buyers (hyperscale data centers), this transaction might raise the "valuation floor for small-scale miners."

Transferring electricity capacity from miners can help "rationalize the Bitcoin network" and enhance the profits of the remaining miners.