Author: André Beganski, Decrypt; Translated by: Baishui, Jinse Finance
Late last week at the Bitcoin 2024 conference in Nashville, Bitcoin mining companies took stock of one another as the period following the halving continues to put pressure on companies’ established business models.
While some public companies see industry-wide hurdles as opportunities to expand their businesses or launch hostile takeovers, others are seeking to gain a leading position by more diversified revenue through innovations such as artificial intelligence computing and chip manufacturing.
At the annual meeting, one corner was packed with companies that make money from fleets of power-hungry machines that perform complex calculations in a race to verify bitcoin transactions. The reward for that effort was cut in half in April during the halving, a once-every-four-years event that slows the gradual expansion of bitcoin’s supply.
Ryan Rasmussen, head of research at Bitwise Asset Management, noted: “Bitcoin miners have to go through this identity crisis in the first few months after the halving. The block reward halving has adverse effects.”
Rasmussen explained that he expects to see consolidation in the bitcoin mining industry over the next 18 months as certain well-capitalized miners look to swallow up competitors. For example, Colorado-based Riot Platforms announced on Tuesday that it had acquired Block Mining, following its hostile takeover of another company, Bitfarms, last month.
Brokerage firm Benchmark named technology-focused bitcoin mining company Bitdeer as a potential acquisition target in a research note this week. Benchmark noted that among its competitors, Bitdeer has “ample existing and planned power capacity,” which makes it particularly attractive.
Bitdeer Chief Strategy Officer Haris Basit noted that the likelihood of a hostile takeover is low, citing a capital structure that makes it difficult for a competitor to gain control. However, he acknowledged that acquisitions are a way for a company’s management team to try to add value to an existing company, and that value ultimately depends on only a few metrics.
“A lot of this happens because management doesn’t add value in other ways,” Basit said of acquisitions. “If you think about a bitcoin mining company, there are limits to what management can do: You have to get operational excellence, low-cost capital, and that’s it.”
According to the U.S. Office of Energy Efficiency and Renewable Energy, Bitdeer's global power capacity is currently 2.5 gigawatts, enough to power 250 million LED light bulbs. Meanwhile, Bitdeer's current power utilization rate is 36%. Basit said some of this capacity may be used by artificial intelligence (AI) and high-performance computing (HPC) companies to generate revenue.
“We are still in the evaluation phase,” he said. “We have hired expert consultants who have built many data centers [...] and they are reviewing each of our sites and evaluating whether they are suitable for use as AI or HPC data centers.”
Bitdeers’ AI plans are somewhat similar to those of Core Scientific, which signed a 12-year HPC hosting contract with cloud infrastructure company CoreWeave in late June. Meanwhile, Core Scientific’s stock price has more than tripled from around $3 in May to more than $10 as of Friday’s close.
Bitdeer is also moving into the ASIC industry, producing chips specifically for bitcoin mining. Not only is this a way for Bitdeer to further diversify its revenue, but Basit said this area of the bitcoin mining industry is dominated by Bitmain’s Antminer.
While some bitcoin miners are interested in acquiring competitors, Marathon Digital is interested in acquiring the assets it mines. The company said Thursday that it will no longer sell bitcoin and announced that it has purchased $100 million worth of BTC to replenish its balance sheet.
Jayson Browder, senior vice president of government affairs at Marathon, said in an interview that the company, which has a reserve of 20,000 bitcoins worth more than $1.3 billion, is currently looking inward and focusing on its own operations rather than evaluating competitors.
“We are the second-largest holder of Bitcoin in the world,” he said. “I think that demonstrates our commitment to the asset and our confidence in its long-term growth.”
