TeraWulf, a Bitcoin mining firm, has expressed its willingness to consider a merger if it presents an opportunity to increase profit margins. However, the company’s chief strategist clarified that they are not interested in pursuing mergers solely for the purpose of “empire building.” This statement comes amidst expectations of more mergers and acquisitions in the mining sector following the recent Bitcoin halving.
Kerri Langlais, TeraWulf’s chief strategy officer, stated in an interview with Cointelegraph that while other publicly-listed Bitcoin miners have set targets to reach certain hashrate milestones, TeraWulf focuses more on organic growth at its existing sites and generating returns for its shareholders. Langlais emphasized the importance of allocating capital wisely to ensure sustained profitability.
The topic of Bitcoin miner mergers and acquisitions gained attention when Riot Platforms attempted a “hostile” takeover of Bitfarms with a $950 million buyout offer, which ultimately failed. However, Riot did manage to acquire a 14.9% stake in Bitfarms. In addition, Bitcoin miner CleanSpark announced a $155 million merger with Griid Infrastructure.
Langlais expects to see more offers for Bitcoin miner mergers and acquisitions in the future but notes that valuations vary significantly, making it challenging to identify worthwhile deals. Currently, Bitcoin miners are valued based on their enterprise value relative to revenue and hashrate. However, Langlais believes there should be a shift towards considering profitability and EBITDA, similar to traditional commodities businesses.
TeraWulf, like other Bitcoin miners, has diversified its revenue streams by investing in other ventures such as AI and high-performance computing. Langlais highlighted the difficulties Bitcoin miners face in expanding due to increased competition for sites and power resources. The intense competition from hyperscalers, who are securing available power capacity nationwide, has driven up land and power prices, thereby reducing the profitability of new Bitcoin mining projects.
The profitability of Bitcoin mining has been a focal point in the industry since the fourth halving event, which reduced the block subsidy by 50% to 3.125 BTC on April 20. Langlais stated that TeraWulf will remain profitable as long as Bitcoin’s price stays above $40,000. Currently, Bitcoin is trading at $55,700.
In conclusion, TeraWulf is open to considering mergers that can enhance its profit margins, but it is focused on organic growth and generating sustained returns for its shareholders. The company expects more merger offers in the Bitcoin mining sector but acknowledges the challenges in valuing and pursuing these deals. Additionally, TeraWulf faces obstacles in expanding due to competition for sites and power resources. Overall, profitability remains a significant concern for Bitcoin miners following the recent halving event.