Riot has the financial capacity to consolidate the bitcoin mining space, the report said.
The broker said it expects the U.S. bitcoin mining space to consolidate to around five large players.
Bernstein said the larger miners should ramp up their M&A game to maintain strategic relevance.
Riot Platforms (RIOT) is the most ambitious bitcoin (BTC) miner to attempt to consolidate the sector, and the company has a desire to build the world’s largest publicly listed mining company, broker Bernstein said in a research report on Tuesday.
The Colorado-based company has the financial capacity to consolidate the mining space as it has no debt and more than $1.3 billion of cash and bitcoin on its balance sheet, the report said.
Riot is trying to acquire rival bitcoin miner Bitfarms (BITF), after buying a 9.25% stake in the company. The miner has offered to buy all the outstanding shares in BITF for $2.30, the company said on Tuesday.
“The bitcoin mining business is becoming tougher for smaller players, with limited capital to ramp up on the global hash power race,” analysts Gautam Chhugani and Mahika Sapra wrote.
Bernstein says it expects the bitcoin mining sector in the U.S. to consolidate to about five large players who will control substantial capacity. It noted that there are more than 20 publicly listed miners at present.
“If power becomes the biggest constraint to scale up artificial intelligence (AI) computation, we see bitcoin miners as a strategic asset controlling power, land and with significant operating capabilities in running data centers,” the authors wrote.
The broker notes that smaller miners are seeing competitive interest from AI data centers that are looking to buy sites. The largest bitcoin miners should ramp up their M&A plans to maintain “long-term strategic relevance,” the report noted.
Bernstein has an outperform rating on Riot shares and a $22 price target. At the time of writing, the shares were trading around $10.30.