Riot Platforms made a $950 million offer to acquire all outstanding shares of Bitcoin mining firm Bitfarms, but the offer was rejected by the Bitfarms board. Despite this, Riot proceeded to acquire a 9.25% stake in Bitfarms, making it the largest shareholder. The proposed buyout price was $2.30 per share, representing a 24% premium over Bitfarms’ one-month volume-weighted average share price. The consideration offered to Bitfarms’ shareholders included a combination of cash and Riot common stock, potentially giving them ownership of up to 17% of the combined company.
The acquisition proposal by Riot Platforms was privately delivered and rejected without substantive dialogue. Concerns were raised about whether certain Bitfarms directors were acting in the best interests of all shareholders, particularly following the termination of Bitfarms CEO Nicolas Bonta. As a result, Riot believed it was necessary to disclose the proposal directly to Bitfarms’ shareholders. After Bitfarms’ Annual General and Special Meeting in 2024, Riot planned to requisition a Special Meeting of Bitfarms’ shareholders to introduce new independent directors to the Bitfarms Board.
Riot Platforms believes that a combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with geographically diversified operations that are well-positioned for long-term growth. Riot Executive Chairman Benjamin Yi stated that the merger would lead to significant potential for future value creation through participation in a financially and commercially stronger company. Riot CEO Jason Les expressed concerns regarding the recent termination of Bitfarms CEO Nicolas Bonta and questioned whether Bonta and co-founder Emiliano Grodzki were acting in the best interests of all Bitfarms shareholders.
The acquisition and proposed merger between Riot Platforms and Bitfarms represent a strategic move towards creating a stronger and more financially stable company in the Bitcoin mining industry. The rejection of the initial takeover offer by Bitfarms’ board led Riot to take a different approach by acquiring a significant stake in the company and seeking to introduce new independent directors to its board. Riot’s belief in the potential synergies between the two companies and their combined global operations highlights the long-term growth prospects in the cryptocurrency market.
The concerns over Bitfarms’ leadership following the termination of its CEO and the lawsuit brought by the same CEO raised questions about the governance practices and decision-making processes within the company. Riot’s decision to requisition a Special Meeting of Bitfarms’ shareholders indicates a desire to bring about change and improve the corporate governance structure of the company. The proposed merger between Riot Platforms and Bitfarms could potentially lead to a stronger and more competitive player in the Bitcoin mining industry, benefiting both companies’ shareholders and the broader cryptocurrency market.
Overall, Riot Platforms’ acquisition and proposed merger with Bitfarms reflect a strategic effort to create a more robust and globally diversified company in the Bitcoin mining sector. The rejection of the initial takeover offer, concerns over Bitfarms’ leadership, and Riot’s subsequent actions demonstrate a complex and evolving relationship between the two companies. The potential for future value creation, enhanced shareholder benefits, and long-term growth prospects resulting from the merger underscore the significance of this development in the cryptocurrency industry.
