Bitcoin Miner TeraWulf Open to Mergers, but Only if It Boosts Profits, Not for 'Empire Building'

Bitcoin Miner TeraWulf Open to Mergers, But Only if It Boosts Profits, Not for 'Empire Building'

Bitcoin mining firm TeraWulf is open to mergers if they can improve profit margins, but the company is not interested in simply expanding for the sake of expansion. This comes amid expectations of more mergers and acquisitions (M&A) in the mining sector following the latest Bitcoin halving.

TeraWulf's Chief Strategy Officer, Kerri Langlais, explained that the company would only consider inorganic growth opportunities through M&A if it leads to profitability. "Expanding merely for growth’s sake, or ‘empire building,’ without considering profitability makes no sense," Langlais said.

While other publicly-listed Bitcoin miners have set targets to reach hashrate milestones, TeraWulf is focusing on "organic growth" at its existing sites and shareholder returns.

Langlais stressed that the company's success hinges on "the discerning allocation of capital to generate sustained returns for our shareholders." This distinction is crucial for investors, who should differentiate between companies that are growing profitably versus simply growing, according to Langlais.

Mergers and Acquisitions in the Mining Sector

Discussions about incoming Bitcoin miner M&A activity came up when Riot Platforms attempted a "hostile" takeover of Bitfarms with a $950 million buyout offer in June. The offer ultimately failed, but Riot did manage to snare a 14.9% stake in Bitfarms.

Bitcoin miner CleanSpark also announced a $155 million merger with GRIID Infrastructure on June 27.

Langlais expects to see more Bitcoin miner M&A offers, but also notes a large "disparity in valuations." This makes it difficult to determine which deals are worth pursuing.

Langlais believes that Bitcoin miners should be valued based on profitability and EBITDA — earnings before interest, taxes, depreciation, and amortization — similar to traditional commodities businesses. "‘Cash is king,’ and metrics like EBITDA, profitability, and free cash flow yield should become the benchmarks for valuing mining businesses moving forward."

Bitcoin Miners Facing Challenges in Expanding

Bitcoin miners are facing challenges in expanding due to emerging competition for sites and power resources. Hyperscalers are quickly securing every available power capacity nationwide, competing for the same locations traditionally sought after by BTC miners. This intense competition is driving up land and power prices, diminishing the profitability of new BTC mining projects.

Profitability margins have been an industry focal point after the fourth halving event saw the block subsidy sliced by 50% to 3.125 BTC — worth $174,100 — on April 20. TeraWulf, which mines most of its Bitcoin with nuclear energy, will remain profitable provided Bitcoin’s price stays above $40,000, according to Langlais.

Bitcoin is currently trading at $55,700, down 4.4% over the last 24 hours and 19.6% over the last month.