Iris Coleman
21 Aug 2024 17:42
Bitfarms is set to significantly expand its energy portfolio by acquiring Stronghold Digital Mining in a $125 million stock-for-stock merger.
According to globenewswire.com, Bitfarms Ltd. (Nasdaq/TSX: BITF), a global Bitcoin (BTC) data center company, announced that it is acquiring Stronghold Digital Mining, Inc. (Nasdaq: SDIG) in a stock-for-stock merger valued at approximately $125 million. The transaction also includes the assumption of $50 million of debt.
Strategic Expansion
This acquisition is consistent with Bitfarms’ strategic plan to expand and rebalance its energy portfolio, with the goal of having approximately 50% of its energy capacity in the United States by the end of 2025. This move is expected to increase Bitfarms’ energy portfolio to over 950 megawatts (MW) by the end of 2025, with potential expansion capacity of up to 1.6 gigawatts (GW) in the coming years.
Stronghold’s assets and capabilities
Stronghold is a vertically integrated crypto mining company focused on Bitcoin mining and environmental cleanup. As of June 30, 2024, the company has a hash rate of 4.0 exahashes per second (EH/s) and a nameplate generating power capacity of 165 MW. Stronghold’s assets currently include 142 MW of Pennsylvania-New Jersey-Maryland Interconnect (PJM) import capacity, with the potential to increase the hash rate to approximately 10 EH/s through a fleet upgrade in 2025.
Stronghold owns over 750 acres of land and two commercial power plants in Pennsylvania, Scrubgrass and Panther Creek Facilities, which are recognized as Class II alternative energy sources due to their environmental benefits, including the recovery and conversion of toxic waste into electricity.
Environmental and financial benefits
Bitfarms’ acquisition of Stronghold is expected to expand its environmental leadership. Stronghold has recovered thousands of acres of toxic waste and has the potential to capture over 60,000 tons of carbon dioxide annually through its Carbon Capture Projects. The deal is also expected to generate $10 million in annual run-rate cost synergies.
Leadership Statement
“This transformational acquisition is a critical step in securing a strong future for Bitfarms,” said Ben Gagnon, CEO of Bitfarms. “We expect to grow our energy portfolio to 950MW by the end of 2025, approximately 50% of which will be in the United States.”
Gregory Beard, Stronghold’s CEO and Chairman, added, “Bitfarms has the vision and financial fortitude to unlock the value of Stronghold’s assets. This combination represents a unique opportunity to maximize value for both companies’ shareholders.”
Transaction Details
The boards of directors of both companies have unanimously approved the transaction, which is expected to close in the first quarter of 2025, subject to regulatory approvals and other customary closing conditions. Stronghold shareholders will receive 2.52 shares of Bitfarms for each Stronghold share they own, representing a 71% premium to Stronghold’s 90-day volume-weighted average price on Nasdaq as of August 16, 2024.
Conference Calls and Advisory
Bitfarms and Stronghold plan to hold a conference call with investors to discuss the transaction on August 21, 2024 at 8:30 a.m. ET. Moelis & Company LLC is serving as financial advisor to Bitfarms and Houlihan Lokey Capital, Inc. is serving as financial advisor to Stronghold.
For more information on the merger or to join the conference call, please visit the original news source.
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