Bitcoin mining companies could become potential acquisition targets due to the significant power demand from hyperscalers and artificial intelligence (AI) firms. According to JPMorgan, these firms are exploring different alternatives to secure their energy needs, which could make Bitcoin mining companies with attractive power contracts appealing acquisition targets.

The report noted that mergers and acquisitions are increasing in the mining sector, especially after the recent halving. For instance, shares of Core Scientific surged after cloud computing firm CoreWeave signed a 200 megawatts artificial intelligence deal with the Bitcoin miner and reportedly made an offer to buy the company in an all-cash deal. Another large Bitcoin miner, Riot Platforms, made a hostile offer to buy out peer Bitfarms last month.

The deal with CoreWeave validates and may accelerate the mining sector’s involvement in high-performance computing (HPC), according to JPMorgan. The bank also stated that this deal could raise the valuation floor for sub-scale mining operators, as a new class of buyers (Hyperscalers) has emerged. It could also help rationalize the Bitcoin network by moving power capacity away from the miners, which would improve the profits of the remaining operators.

JPMorgan 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 potentially attractive targets. Additionally, some Bitcoin miners are under financial pressure to exit the market following the recent halving event and may be more receptive to a deal. Broker Bernstein stated last week that Riot Platforms was the best positioned to attempt to consolidate the mining sector, as the miner has the financial capacity for deal-making.

The potential acquisition of Bitcoin mining companies by hyperscalers and AI firms could have significant implications for the mining sector. It could lead to a consolidation of the industry, with larger players acquiring smaller ones to secure their energy needs. This could also lead to a more efficient use of power capacity, as the remaining operators would need to be more competitive to remain viable.