tl;dr
Core Scientific's CEO, Adam Sullivan, has reported increased interest from top-tier private equity firms following the announcement of the CoreWeave AI infrastructure deal. Private equity firms are eyeing bitcoin miners' existing infrastructure as attractive options for AI-related computing power. T...
Core Scientific's CEO, Adam Sullivan, has reported increased interest from top-tier private equity firms following the announcement of the CoreWeave AI infrastructure deal. Private equity firms are eyeing bitcoin miners' existing infrastructure as attractive options for AI-related computing power. The recent surge in AI-related energy demand has created opportunities for bitcoin miners to house AI machines in their data centers. Private equity firms view the mining sector as a potential area for mergers and acquisitions, driven partly by the recent bitcoin halving event. Despite the potential for private equity involvement, the long-term impact on the mining sector remains uncertain. The competitive market and margin squeeze are leading to increased M&A activity among mining companies, with Core Scientific expecting further consolidation in the industry.
Private equity (PE) firms are finally seeing value in bitcoin (BTC) miners, thanks to the rising demand for data centers that can power artificial intelligence-related (AI) machines. The bitcoin miners' need for enormous amounts of energy isn't a secret - in fact, it's a hotly debated topic. "Private equity is obviously chasing the data center space right now; even private equity firms that haven't necessarily done data centers before are evaluating the space," Sullivan said. These PE firms finally see value in bitcoin miners as they can help the AI-related firms house their machines in already-built mining infrastructure or partner with miners to build out data centers faster than building from scratch.
Core Scientific recently inked a 12-year, 200 megawatt (MW) deal with cloud computing firm CoreWeave for AI-related computing needs, with options to expand the capacity further. Sullivan noted that since the news broke about the deal, Core Scientific has received several approaches from tier-one private equity firms offering financing for further AI-related partnerships. In fact, the deal has triggered a re-rating of the bitcoin mining sector as it renewed investors' interest in the sector.
One of the main reasons private equity is interested in the mining sector now is the recent bitcoin halving, which cut the bitcoin rewards in half, making it more competitive for the miners. Many miners are struggling to keep their businesses profitable, and some are looking to either sell the company or diversify their revenue sources by repurposing their data centers to host HCP and AI-related computing machines. The overcrowded mining space is feeling pressure from the margin squeeze, resulting in a flurry of acquisitions and renewed deal-making talks among the miners.
Despite the outright rejection of the offer, Sullivan thinks that M&A is just starting in the mining space. The recent wave of M&A activity also saw a hostile takeover battle between Riot Platforms (RIOT) and Bitfarms, CleanSpark (CLSK) buying GRIID (GRDI) and Hut 8 getting AI-related financing, and this is just the beginning. "I think we're still in the early innings of the M&A that's going to occur over the course of the next 12 months," said Sullivan. "I think many companies are much more incentivized to sell their businesses to other larger companies, given the infrastructure constraints or look to convert more of their facilities to HPC," he noted, adding that most of the "mid-market" miners are likely to put themselves up for sale.
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LIFE SCIENCES
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