PwC report: Crypto M&A surged 4,846% in 2021, average deal size tripled

According to a PricewaterhouseCoopers (PwC) report, the total value of crypto-related mergers and acquisitions (M&A) rose to $55 billion in 2021 versus $1.1 billion a year earlier. The average deal size has more than tripled since 2020 to $179.7 million, while the total value of crypto fundraising deals climbed by 645%.

The US led in absolute numbers, with 51% of all deals last year, up from 41% in 2020. Europe, Middle East, and Africa (EMEA) garnered 33% of all deals, with Asia Pacific (APAC) netting 16%. Looking at deal dollar values, EMEA led the way at $25.5 billion versus $24.5 billion for the US and $5 billion for APAC. Behind the rise in average deal size to $179.7 million from $52.7 million was 2021’s US-centered special purpose acquisition company (SPAC) boom, which featured a number of $1 billion+ mergers. According to the report, each of the top 10 deals was worth more than $1 billion.

“2021 also saw crypto players tap Special-Purpose Acquisition Companies (SPAC) as a means of accessing capital markets, with 4 of top 10 deals bringing a total of $19.4 billion in 2021. The average size of the top 10 M&A deals was $3.3 billion, just over 9x larger than Binance’s acquisition of CoinMarketCap in 2020,” PwC added.

Further, PwC tracked crypto fundraising deals, finding a 645% year-over-year rise in 2021 to a total value of $34.3 billion, while the average deal size was up 143% to $26.3 million.

Overall, the level of investments in crypto, as seen in the PwC report, points to the “continuing maturity of the crypto ecosystem.” As a result, the ecosystem is poised to witness rapid evolution and even more adoption with interest from various investors as more institutional funds flow in.

Regarding the 2022 predictions, the report authors expect continued momentum, noting a significant rise in venture capital funds and dry powder needing to be put to work. With the slowdown in SPAC action, venture capital firms and incubators will be the largest source of M&A activity in crypto.

This gradual slowdown in SPACs could reflect the future of mergers and acquisitions in the crypto space in the year 2022. Both saw explosive growth in 2021, with interest rates low and investors seeking risky assets. Now, however, interest rates are set to rise, with investors avoiding risk-heavy assets.

Across the crypto industry, Marathon Digital (MARA) CEO Fred Thiel, in particular, expects continued consolidation in the mining sector as cash-strapped miners look to merge with stronger players.

Digital assets exploded with various cryptos, from bitcoin to dogecoin, hitting their all-time highs in the past year. The market capitalization of the ecosystem even hit $3 trillion at one point in November, roughly the size of the entire UK economy, amid a broader rally. However, it has since cooled off and now stands at $2 trillion.