Riot Platforms (NASDAQ:RIOT) recently said that it has a more than 9% stake in rival Bitcoin (BTC-USD) miner Bitfarms (NASDAQ:BITF) and wants to buy the firm. The miner has made a to buy Bitfarms after a private approach was rejected.
RIOT stock is falling slightly on the news while BITF stock is on the rise. Shares of Riot Platforms opened today at $10.24 per share and a market capitalization of about $3 billion. Meanwhile, BITF opened at $2.23 per share and a market cap roughly $845 million.
Riot Platforms’ latest offer for the company comes to for Bitfarms. Riot is the Bitcoin miner’s largest shareholder with a 9.25% stake.
Consolidation in the Bitcoin Patch
Bitcoin miners are looking to consolidate to cut energy costs. Electricity is the main cost of BTC mining, using . The power consumption of Bitcoin operations is close to the power needs of Poland, per Digiconomist.
Bitcoin energy use is becoming a problem even in pro-BTC-mining Texas. Navarro County recently rejected Riot’s “reinvestment zone” on a new . Opponents say Texas is the leading Bitcoin mining state, but miners have created only 2,000 permanent jobs there. Riot said its Corsicana mining operation would eventually employ 180 people and stimulate other economic activity.
Bitfarms is due to hold its regular annual meeting on May 31. Riot wants to hold a special meeting to put its nominees on the Bitfarms board. The combined company would have operations in both North America and South America as well as 15 facilities using 2.2 gigawatts of power. In its proposal, Riot said it has 10 times more cash than Bitfarms and can fund its growth.
According to CoinDesk, Bernstein Research expects the U.S. BTC mining space to consolidate into They see a collision between artificial intelligence (AI) data centers and Bitcoin miners, with the former set to potentially need the latter’s land, power and operating expertise.
Bernstein expects BTC prices to reach and . Bitcoin currently trades for about $67,800 per coin.
The Bottom Line
Bitcoin miners are merging for the same reason as oil companies — to reduce costs and generate profits.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
