Riot Platforms Inc. (Nasdaq: RIOT) has announced a proposal to acquire Bitfarms Ltd. (Nasdaq/TSX: BITF) in an effort to create the world’s largest publicly listed bitcoin miner.
The proposed acquisition, valued at approximately $950 million in total equity, would see Riot acquire all outstanding shares of Bitfarms for $2.30 per share, representing a 24% premium over Bitfarms’ one-month average share price.
TLDR
- Riot Platforms has proposed to acquire Bitfarms for $2.30 per share, representing a 24% premium over Bitfarms’ one-month average share price.
- The proposed acquisition would create the world’s largest publicly listed bitcoin miner, with geographically diversified operations and a combined hashrate of 52 EH/s by year-end.
- Riot has accumulated a 9.25% stake in Bitfarms, becoming its largest shareholder, after Bitfarms’ Board rejected the initial proposal without meaningful engagement.
- Riot is concerned about the governance of Bitfarms following the abrupt termination of its CEO and allegations raised in a lawsuit filed by the former CEO.
- Following Bitfarms’ Annual General and Special Meeting on May 31, Riot plans to call a Special Meeting to introduce new independent directors to the Bitfarms Board.
Riot’s Executive Chairman, Benjamin Yi, emphasized the potential benefits of the combination, stating,
“A combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with geographically diversified operations well-positioned for long-term growth.”
The proposed acquisition would result in a vertically integrated bitcoin mining company with up to 1.5 GW of power capacity and 52 EH/s self-mining capacity by the end of the year.
The combined entity would operate 15 facilities across the United States, Canada, Paraguay, and Argentina, offering both geographic diversification and favorable energy arrangements.
Despite the potential benefits, Riot’s initial proposal, submitted privately to the Bitfarms Board on April 22, was rejected without meaningful engagement.
In response, Riot has accumulated a 9.25% stake in Bitfarms, becoming its largest shareholder. The company now plans to present its proposal directly to Bitfarms shareholders, citing concerns about the governance of Bitfarms following the abrupt termination of its CEO, Geoffrey Morphy, and allegations raised in a lawsuit filed by the former CEO.
Riot’s CEO, Jason Les, expressed his concerns, stating,
“We are deeply concerned that the founders on the Bitfarms Board – Nicolas Bonta and Emiliano Grodzki – may not be acting in the best interests of all Bitfarms shareholders.”
Les pointed to the sudden termination of the CEO without a transition plan and the allegations set out in the lawsuit as raising serious questions about the actions of certain members of the Bitfarms Board.
In light of these concerns, Riot plans to call a Special Meeting following Bitfarms’ Annual General and Special Meeting on May 31 to introduce new independent directors to the Bitfarms Board.
This move underscores Riot’s commitment to ensuring that the proposed acquisition is in the best interests of all shareholders.
The announcement of the proposed acquisition has had an immediate impact on the market, with Bitfarms’ shares rising nearly 6% to $2.13 as of 14:00 UTC following Riot’s announcement.
If the acquisition is successful, it could have far-reaching implications for the bitcoin mining industry, potentially setting the stage for further consolidation and the emergence of a new global leader in the sector.
