Bitcoin mining companies benchmarked each other at Bitcoin 2024 in Nashville last weekend, as the post-halving situation continues to put pressure on companies’ established business models.
While some public companies are seeing industry-wide hurdles as an opportunity to expand or even launch hostile takeover attempts, others are seeking to gain an advantage by diversifying revenue streams through innovations in areas like AI computing and chip manufacturing.
The annual conference was packed with companies making money from massive, power-hungry machines constantly running complex calculations in the race to validate bitcoin transactions. In April, the reward for that effort was cut in half in the halving, a once-every-four-years event that slows the pace of bitcoin’s gradually expanding supply.
Image: Andre Beganski/Decrypt
“In the first few months after the halving, bitcoin miners will have to navigate an identity crisis,” Ryan Rasmussen, head of research at Bitwise Asset Management, told Decrypto. “There’s the headwind of the block reward being cut in half.”
Rasmussen said he expects more consolidation within the bitcoin mining industry over the next 18 months, with some well-funded miners looking to absorb competitors. Colorado-based Riot Platforms, for example, announced it had acquired Block Mining on Tuesday after pursuing a hostile takeover bid for another company, Bitfarms, last month.
Brokerage firm Benchmark named tech-focused bitcoin miner BitDeer as a potential acquisition target in a research report this week, noting that BitDeer is particularly attractive among its competitors due to its “ample existing and planned power capacity.”
Image: Andre Beganski/Decrypt
BitDeer chief strategy officer Harris Basit told DeCrypto that a hostile takeover is highly unlikely due to the company’s capital structure, which makes it difficult for a competitor to take control. Still, he acknowledged that acquisitions are a way for company management teams to try to add value to existing businesses, and that it ultimately boils down to a few metrics:
“These often happen when management isn’t adding value in other ways,” Bassit said of the acquisition. “If you think about a bitcoin mining company, there’s only so much management can do. They can only operate more efficiently and get cheaper capital, but that’s it.”
BitDear’s global capacity is currently 2.5 gigawatts, enough to power 250 million LED light bulbs, according to the U.S. Office of Energy Efficiency and Renewable Energy. At the same time, BitDear is currently using 36% of electricity. And some of that capacity could become a revenue stream for artificial intelligence (AI) and high-performance computing (HPC) companies, Basit said.
Image: Andre Beganski/Decrypt
“We’re still in the evaluation phase,” he said. “We’ve hired a specialist consultant who has built a lot of data centers. […] They are looking at all our sites and evaluating them for use as AI or HPC data centers.”
BitDeer’s AI plans are somewhat similar to those of CoreScientific, which in late June announced a 12-year HPC hosting deal with cloud infrastructure company CoreWeave. Meanwhile, CoreScientific’s shares have more than tripled, from about $3 in May to more than $10 as of Friday’s close.
Bitdeer has also expanded into the ASIC industry, producing chips specifically for bitcoin mining. Not only is this a way to further diversify Bitdeer’s revenue, but Basit noted that this part of the bitcoin mining industry is dominated by Bitmain’s Antminers.
Image: Andre Beganski/Decrypt
While some bitcoin miners are interested in acquiring competitors, Marathon Digital is interested in buying up the assets it mines. The company said on Thursday that it will no longer sell bitcoin and also announced that it had purchased $100 million worth of BTC on its balance sheet.
Jason Browder, Marathon’s senior vice president of government relations, said in an interview that the company is now looking inward and focusing on its own business, rather than evaluating competitors. The company has 20,000 bitcoin holdings worth more than $1.3 billion.
“We have the second-largest holdings of the coin among publicly traded companies in the world,” he said. “We believe this is a testament to our commitment to the asset and our belief in its long-term growth.”
Editor: Andrew Hayward
