Bitcoin miners are releasing their production updates for May, the first full month since the latest Bitcoin halving event, and in its wake, some big players are making significant moves to add revenues through strategic deals and diversifications.
Firms like Core Scientific have been seeking to expand revenues since April’s bitcoin halving, which reduced miner rewards by 50%. Other mining firms, including Bit Digital (ticker BTBT) and Hut 8 (HUT), were also seen diversifying their revenue streams into AI, The Block previously reported.
Earlier this week, North American bitcoin mining and hosting services provider Core Scientific (CORZ) signed a series of 12-year contracts with AI Hyperscaler CoreWeave, a cloud computing firm. Two days later, Core Scientific rejected CoreWeave’s more than $1 billion buyout offer, saying it “significantly undervalues” the company.
JPMorgan analysts see the Core Scientific news as making the entire sector more attractive to potential buyers.
“With immediate power access in relatively short supply, Hyperscalers and AI firms are exploring alternatives, including leasing power/datacenter capacity from (or outright acquiring) bitcoin miners,” JPMorgan analysts wrote in a June 5 note. “We estimate U.S. listed miners alone draw up to 5GW of power, and have access to another 2.5 GW through power purchase agreements, which make them a potentially attractive target.”
The analysts continued, “Some operators are feeling the financial pinch from the recent block reward halving…and are actively exploring exit strategies.”
The Core Scientific news is most impactful to Iris Energy (IREN), according to JPMorgan, which said Iris was early to embrace HPC and has secured the rights to develop more than 2 gigawatts (GW) of power. TeraWulf (WULF) has also announced pilot HPC programs.
Rising share prices amid M&A activity
Late Wednesday, Riot Platforms (RIOT) increased its ownership stake in Bitfarms (BITF) to 12% ahead of a special meeting of the company’s shareholders, at which Riot intends to nominate several independent directors to join the board of directors, which “follows from Riot’s serious concerns regarding the Board’s track record of poor corporate governance.”
On May 28, Riot Platforms said it purchased a 9.25% stake in Bitfarms after a rejected acquisition proposal, which valued the latter at $950 million and would create one of the largest publicly listed Bitcoin mining firms.
On Thursday, Bitdeer (BTDR) said it entered into a $140 million share purchase agreement with FreeChain Inc., better known as Desiweminer, a fabless crypto ASIC design company.
Shareholders appear to favor M&A potential over reducing miner rewards, as several aforementioned stocks have surged this week.
Iris Energy shares are up more than 35% over the past five trading days, while TeraWulf shares are up 32%. Core Scientific surged 40% on Tuesday alone and is up 65% over the past five days.
Two of the largest companies by market cap in the sector, Marathon Digital (MARA) and Riot Platforms, are also trading higher despite being hit yesterday by a short-seller report.
Source: The Block
