Bitcoin mining Terawolf is open to mergers but not to ’empire building’
The bitcoin miner said it would consider a merger if there was an opportunity to expand profit margins, but not just for “empire building,” according to its chief strategist.
The new Bitcoin halving comes as more mergers and acquisition deals are expected in the mining sector.
“Of course, we are looking at inorganic growth opportunities through M&A [but] “It doesn't make sense to expand just for the sake of growth or 'empire building' without taking profitability into account,” Terra Wolf, chief strategy officer, explained in an interview with Cointelegraph.
As other publicly listed Bitcoin (BTC) miners set targets to reach hashrate milestones, Langlais said TeraWulf is focusing more on “organic growth” on its existing sites and shareholder returns.
“Our success depends not only on the pace of our expansion, but also on the allocation of capital to deliver sustainable returns to our shareholders,” said Langlais.
“This distinction is critical; it allows investors to distinguish between companies that are growing profitably and those that are simply growing.”
Discussions of the lucrative Bitcoin miner's M&A activity came when Riot Platforms tried to take over BitFarms in a $950 million buyout offer in June — which ultimately failed.
Riot, however, managed to hold a 14.9% stake in BitFarms.
Bitcoin miner CleanSpark also announced a $155 million merger with GRIID Infrastructure on June 27.
Teraulf Langlais expects to see more Bitcoin miner M&A deals, but notes a large “difference in valuations.”
Bitcoin miners are currently valued by their enterprise value in terms of revenue and hashrate, but Langlais wants to turn that into profitability and EBITDA – before interest, taxes, depreciation and amortization – just like traditional commodity businesses.
“‘Cash is king' and metrics like EBITDA, profitability and free cash flow rates should be the benchmarks for evaluating mining businesses going forward.”
Bitcoin miners struggle to expand
TeraWulf is one of many bitcoin miners who have shifted some of their capabilities to other ventures, such as artificial intelligence (AI) and high-performance computing, diversifying their revenue streams.
Langlais said Bitcoin miners may face significant barriers to expansion due to competition for sites and energy resources.
“Hyperscalers are rapidly securing every available power capacity nationwide, competing for the same space typically required by BTC miners,” Langlais said. “This intense competition is driving up land and energy prices, thereby reducing the profitability of new BTC mining projects.”
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Profit margins have been the focus of the industry since the fourth half event saw a 50% rise to 3.125 BTC – worth $174,100 – on April 20 after the block subsidy was paid.
Langlais said TeraWulf – which produces most of the Bitcoin with nuclear power – will remain profitable as long as the price of Bitcoin remains above $40,000.
Bitcoin is currently trading at $55,700, down 4.4% in the last 24 hours and 19.6% in the last month.
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