Key Points
- Bitcoin mining company TeraWulf is contemplating a merger to expand its profit margins.
- Public-listed Bitcoin mining firms are setting targets to reach different hashrate milestones.
Following the Bitcoin halving event, BTC miners are facing a sharp drop in profits, leading to key decisions for future growth. Bitcoin mining company TeraWulf is considering a merger if it presents an opportunity for expanding profit margins.
This move by TeraWulf aligns with other firms that are exploring similar merger options to maintain profits. For instance, Riot Platforms attempted a takeover of Bitfarms with a $950 million buyout last month, which eventually failed. In a similar vein, Bitcoin miner CleanSpark announced its merger with GRIID infrastructure for $155 million on June 27.
Strategic Growth and Expansion
TeraWulf’s chief strategy officer, Kerri Langlais, stated that the company is open to inorganic growth opportunities through mergers and acquisitions. However, she emphasized that expansion for the sake of growth, without considering profitability, is not a sensible strategy.
Public-listed Bitcoin mining firms such as Marathon Digital are setting targets to reach different hashrate milestones. Langlais conveyed that TeraWulf is prioritizing “organic growth” at its current locations and enhancing shareholder returns. The company’s success, according to Langlais, will depend not just on the speed of expansion, but also on the careful allocation of capital to generate sustained returns for shareholders.
Langlais also expects to see more mergers and acquisitions among Bitcoin miners, though she noted there is a “large disparity in valuations” making it difficult to determine which deals are worth pursuing. She suggested that metrics like EBITDA, profitability, and free cash flow yield should become the benchmarks for valuing mining businesses.
Challenges in Bitcoin Mining Expansion
As Bitcoin mining becomes more competitive and less rewarding, miners are exploring other avenues of earnings. For example, Marathon Digital recently began mining other PoW cryptocurrencies like Kaspa. Moreover, companies like TeraWulf are using their hash power for other areas like artificial intelligence (AI) and high-performance computing to expand their revenue streams.
However, Langlais warned that Bitcoin miners could face significant obstacles while expanding due to increasing competition for power resources. She noted that this intense competition is driving up land and power prices, which could diminish the profitability of new Bitcoin mining projects.
TeraWulf currently mines most of its Bitcoins using nuclear energy and plans to remain profitable as long as the BTC price stays above $40,000.
