Bitcoin mining firms sized each other up at Bitcoin 2024 in Nashville late last week, as a post-halving stretch continues to put pressure on firms’ established business models.

While some publicly-traded players are treating the industry-wide hurdle as an opportunity to expand their operations or launch hostile takeover attempts, others are embracing more diversified revenue through innovations like AI compute and chip manufacturing to get ahead.

At the annual conference, a corner was crammed with firms that make money through fleets of power-hungry machines, which constantly crunch complex calculations in a race to verify Bitcoin transactions. In April, the reward for that endeavor was slashed in half during the halving, a quadrennial event that slows the pace of Bitcoin’s gradually expanding supply.

Image: André Beganski/Decrypt

“In the first few months following the halving, it’s this identity crisis that Bitcoin miners have to go through,” Bitwise Asset Management’s Head of Research Ryan Rasmussen told Decrypt. “You have the headwinds from block rewards being cut in half.”

Consolidation within the Bitcoin mining industry is expected over the next 18 months, Rasmussen explained, as certain miners that are well capitalized look to consume competitors. Colorado-based Riot Platforms, for example, announced Tuesday that it had acquired Block Mining after pursuing a hostile takeover of a different company, Bitfarms, last month.

The broker Benchmark identified Bitdeer, a technology-focused Bitcoin miner, as a potential takeover target in a research report this week. Benchmark noted that among its competitors, Bitdeer has “ample existing and planned power capacity” that makes it especially attractive.

Image: André Beganski/Decrypt

Bitdeer’s Chief Strategy Officer Haris Basit told Decrypt that a hostile takeover is very unlikely, citing a capital structure that would make it difficult for a competitor to assume control. Still, he recognized that takeovers are one way that firms’ management teams are trying to add value to their existing companies, which ultimately boil down to just a few metrics. 

“A lot of that stuff happens when management’s not adding value in some other way,” Basit said of takeovers. “If you think about a Bitcoin mining company, there’s a limit to what management can do: You’ve got to get operational excellence, low-cost capital, and that’s about it.”

Bitdeer’s global power capacity is currently 2.5 gigawatts, enough to power 250 million LED light bulbs, according to the U.S. Office of Energy Efficiency and Renewable Energy. At the same time, Bitdeer currently utilizes 36% power. And some of that capacity could be directed at ​​artificial intelligence (AI) and high-performance computing (HPC) firms for revenue, Basit said.

Image: André Beganski/Decrypt

“We’re still in the evaluation stage,” he said. “We’ve hired expert consultants that put up a lot of data centers […] and they’re going through and looking at every one of our sites and evaluating them for use as AI or HPC data centers.”

Bitdeers AI plans somewhat mirror those of Core Scientific, which unveiled a 12-year HPC hosting contract in late June with CoreWeave, a cloud infrastructure company. Core Scientific’s stock price, meanwhile, has more than tripled from around $3 in May to over $10 as of Friday’s close.

Bitdeer is also moving into the ASIC industry, manufacturing chips that specialize in Bitcoin mining. Not only is it a way to further diversify Bitdeer’s revenue, but Basit said that area within the Bitcoin mining industry is dominated by Bitmain’s Antminers.

Image: André Beganski/Decrypt

While some Bitcoin miners are interested in buying up the competition, Marathon Digital is interested in scooping up the asset it mines instead. The company said Thursday that it would no longer sell Bitcoin, announcing it had also bought $100 million in BTC for its balance sheet.

Jayson Browder, Marathon’s SVP of government affairs, told Decrypt in an interview that the company is currently looking inward and focusing on its own operations, as opposed to assessing competitors. The firm’s Bitcoin stash stands at 20,000 Bitcoin, worth over $1.3 billion.

“We are the second-largest holder of the coin of any publicly traded company in the world,” he said. “I just think this shows our commitment to the asset and our belief in its long-term growth.”

Edited by Andrew Hayward