Crypto companies are now at the forefront of a significant wave of mergers and acquisitions, driven largely by the boom in artificial intelligence. Bitcoin mining firms, with their extensive data centers, access to fiber lines, and substantial power resources across the U.S., are becoming key players in this trend. These facilities are essential for the compute-intensive operations of AI, making them highly sought after.
Bitcoin Halving Pressures Miners
Following the bitcoin halving event in April, which occurs approximately every four years, the profitability of generating new tokens has decreased significantly. JPMorgan Chase analysts noted earlier this month that “some operators are feeling the financial pinch from the recent block reward halving, which cut industry revenues in half, and are actively exploring exit strategies.”
Convergence of AI and Crypto
As the AI industry rapidly expands and demands more capacity, bitcoin miners are seeking new ways to generate returns on their substantial capital investments. This convergence has led to a surge in mergers, financings, and partnerships.
Core Scientific and CoreWeave Deal
Recently, U.S. bitcoin miner Core Scientific announced an expanded agreement with CoreWeave, an Nvidia-backed startup that provides technology for running AI models. Core Scientific will deliver 70 megawatts of computing infrastructure to support CoreWeave’s operations. This deal is expected to generate an additional $1.2 billion in revenue over 12 years, on top of an existing agreement anticipated to bring in $3.5 billion. In total, Core Scientific plans to provide about 270 megawatts of infrastructure to CoreWeave by the second half of 2025, with the potential to add an additional 230 megawatts at other sites.
Earlier this month, CoreWeave offered to buy Core Scientific for $1.02 billion, but Core Scientific rejected the bid. The company, which returned to the public market in January after emerging from bankruptcy, is currently valued at about $1.8 billion. Core Scientific CEO Adam Sullivan stated, “The world is changing, and many data centers built in the last 20 years are not suitable to support future computing requirements.”
Hut 8’s AI Investment
In a related development, bitcoin mining group Hut 8 announced it had raised $150 million in debt from private equity firm Coatue to expand its data center portfolio for AI. Based in Miami, Hut 8 is among several crypto mining companies pivoting to AI. The company reported in its first-quarter earnings last month that it had purchased its first batch of 1,000 Nvidia graphics processing units (GPUs) and secured a customer agreement with a venture-backed AI cloud platform. Hut 8 generates 6% of its sales from AI, according to CoinShares.
Robert Yin, a partner at Coatue, emphasized the growing appreciation for high-quality power assets, stating that Hut 8 has developed a strong pipeline of attractive expansion assets. Hut 8 CEO Asher Genoot shared that the company had finalized commercial agreements for its new AI vertical under a GPU-as-a-service model, including a customer agreement for fixed infrastructure payments plus revenue sharing.
Bit Digital’s Shift to AI
Bit Digital, another bitcoin miner, has also shifted focus towards AI, now deriving an estimated 27% of its revenue from this sector. The company recently signed an agreement to supply 2,048 Nvidia GPUs over three years, expected to generate $92 million in annual revenue. Bit Digital plans to finance the deal through a mix of cash and digital assets and entered a sale-leaseback agreement for half of the new GPUs to reduce its capital outlay.
Market Consolidation and Expansion
The combined market capitalization of the 14 major U.S.-listed bitcoin miners reached a record high of $22.8 billion on June 15, adding $4.4 billion in just two weeks, according to a June 17 research note from JPMorgan.
The bitcoin mining sector is experiencing significant consolidation. For instance, bitcoin miner CleanSpark recently agreed to acquire rival firm GRIID for $155 million in an all-stock deal, although GRIID’s shares plummeted over 50% following the news.
Robinhood’s Strategic Acquisition
Outside the mining space, trading platform Robinhood recently agreed to purchase Bitstamp, a Luxembourg-based crypto exchange, for around $200 million in cash. This acquisition will bolster Robinhood’s crypto operations as it faces regulatory challenges in the U.S. over its crypto dealings. Robinhood’s stock is up 75% this year, and the company had $4.7 billion in cash and equivalents at the end of the first quarter.
