🏰 Riot Plans Hostile Takeover of Bitfarms

• 💵 Tether invests $150m in Bitdeer, a Bitcoin mining firm founded by Jihan Wu. Bitdeer plans to use the funds for data center expansion, ASIC-based mining rig development, and other purposes.

Here’s what we cover this week:

• 🫴 Riot “hostile” takeover of Bitfarms

• 🐺 Nazar Khan talks about TeraWulf and AI

• 🤖 Bitcoin mining and AI

• 🇸🇻 Cathie Woods is bullish on El Salvador

🤑 Riot Proposes $950M Buyout of Bitfarms Amid CEO Dispute and Earnings Concerns

• Bitcoin miner Riot Platforms proposes a $950m buyout of Bitfarms, a significant premium over its share price, after a rejected private offer in April.

• Riot, already Bitfarms' largest shareholder with a 9.25% stake, offers combined cash and common stock, representing a 24% premium over Bitfarms' one-month volume-weighted average share price as of May 24, 2024.

• Bitfarms shareholders would own approximately 17% of the combined company under the proposed deal.

• Riot states the offer would provide Bitfarms' shareholders with potential future value creation through participation in a financially stronger company led by an established management team.

• Bitfarms' earnings showed a disappointing performance in 2023, despite costly technical upgrades, with April earnings dropping 29% from the previous year. In contrast, Riot saw a 131% increase in net income in Q1 2024.

• A combined company could potentially boast the largest capacity of any publicly listed Bitcoin miner, with approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity, potentially rising to 1.5 GW of power capacity and 52 EH/s of self-mining capacity by year-end.

• Marathon has also set a 2024 goal of reaching 50 EH/s, with its hashrate currently at 29.9 EH/s as of April 30.

🧱 Riot Was Also Identified as the Best Suited to Consolidate

• Riot is identified by broker Bernstein as the most ambitious Bitcoin miner aiming to consolidate the sector.

• Riot is financially capable of consolidation, boasting no debt and holding over $1.3b in cash and Bitcoin on its balance sheet.

• Bernstein analysts emphasize that the Bitcoin mining business is becoming increasingly challenging for smaller players with limited capital, pushing towards consolidation.

• The report anticipates the consolidation of the U.S. Bitcoin mining sector to approximately five major players with substantial capacity, down from over 20 publicly listed miners currently.

• Bitcoin miners are seen as strategic assets due to their control over power, land, and operational capabilities in running data centers, especially if power becomes a significant constraint for scaling AI computation.

• Smaller miners are attracting interest from AI data centers looking to acquire sites, prompting larger miners to ramp up their merger and acquisition (M&A) activities to maintain long-term strategic relevance.

🐺 Nazar Khan Talks About TeraWulf the Demand for AI and Their Continued Expansion

• Nazar Khan, Co-Founder, COO and CTO stated that TeraWulf is currently running a pilot for an AI company using a small Nvidia GPU cluster.

• He emphasized the increasing need for high-density computing, crucial for both Bitcoin mining and AI applications.

• Nazar highlighted TeraWulf's key assets, including large-scale, low-cost, and clean power infrastructure, essential for meeting the growing demand for high-density computing.

• Nazar discussed the potential transition of Bitcoin miners into AI service providers due to profitability and market valuation differences.

• He noted that while Bitcoin mining is highly profitable on a cash basis, market valuation differs significantly from traditional high-performance computing clients like Microsoft.

• Nazar outlined TeraWulf's plans to continue expanding its infrastructure, aiming to reach 550 megawatts by the end of 2025 and exploring further growth opportunities beyond 2026.

• Despite uncertainties, Nazar expressed optimism about Bitcoin's future value, expecting its increase due to growing adoption and demand.

• The conversation highlighted the challenges and opportunities in the cryptocurrency mining industry, particularly in balancing profitability, market perception, and infrastructure development.

💕 Bitcoin Miners Increasing Focus on AI

• Bitcoin miners are diversifying, leveraging their infrastructure to meet the growing demand for AI applications.

• Iris Energy (IREN) has been expanding its operations to serve the AI market by repurposing its data centers.

• Remote locations with cheap land and renewable power sources are favored for building data centers, minimizing infrastructure costs.

• With 2,000 MW of power secured and 200 MW already operational, IREN aims to further expand its capacity to meet the demands of the AI market.

• IREN has secured its first customer, Poolside AI, dedicated to AI-driven code development, highlighting the potential for growth in the AI market.

• Nvidia CEO Jensen Huang envisions a new class of data centers, termed "AI factories," dedicated to processing data, training models, and generating AI.

• The trend towards AI-focused data centers extends beyond hyperscalers and OEMs, Core Scientific venturing into the high-yield AI space with CoreWeave.

• The concept of self-sustaining data centers, funded by mining and serving AI workloads, is deemed attractive due to its cost-effectiveness and independence from tenants.

• However, some experts raise concerns about scalability and resilience compared to major players in the data center industry.

🇸🇻 El Salvador in the News

📈 El Salvador's Bitcoin and AI Plans Could Boost GDP Tenfold by 2029, Predicts Cathie Wood

• ARK Invest CEO Cathie Wood predicts that El Salvador could see its GDP increase tenfold over the next five years through Bitcoin and artificial intelligence adoption under President Nayib Bukele's leadership.

• Wood believes that President Bukele's commitment to making El Salvador a hub for Bitcoin and AI communities could drive this growth.

• The meeting between Wood and Bukele discussed Bitcoin's integration into capital markets, AI, and tax policies.

• Max Keiser, a Bitcoin advocate who advises Bukele, mentioned that Wood presented calculations on how El Salvador's GDP could reach $300b by 2029.

• El Salvador's GDP was $32.4b in 2022 and has grown over 30% since Bukele took office in June 2019.

• In 2023, only 12% of the local population used Bitcoin at least once to pay for goods and services, according to a survey.

⛵️ Jack Dorsey-backed Bitcoin Mining Pool Opens Headquarters in El Salvador

• Ocean Mining, a Bitcoin mining pool supported by Jack Dorsey, has established its international hub and headquarters in San Salvador, El Salvador.

• The decision to open the hub in El Salvador was based on the country's Bitcoin-friendly policies and its role as a leader in cryptocurrency adoption.

• Stacy Herbert, head of El Salvador's Bitcoin office, welcomed Ocean's presence, highlighting its contribution to the Bitcoin-first culture in the country.

• Ocean Mining was launched in late 2024 and operates as a decentralized, non-custodial, and transparent Bitcoin mining pool.

• Led by Bitcoin Core developer Luke Dashjr, Ocean Mining aims to support decentralized mining and enable miners to receive block rewards directly from Bitcoin.

• In November 2023, Jack Dorsey led a $6.2m seed round for Mummolin, the parent company of Ocean Mining, to support decentralized mining efforts.

🧠 Interesting Data