- Riot Platform is offering $950 million to acquire Canadian Bitcoin mining company Bitfarms.
- Bitfarms is facing leadership turmoil following a lawsuit filed by CEO Geoffrey Morphy.
- The merger will create the largest publicly traded Bitcoin mining company by volume.
Riot Platforms, a prominent Bitcoin mining company and Bitfarms’ largest shareholder, has made a $950 million hostile takeover offer for Canadian Bitcoin mining company Bitfarms.
Riot’s acquisition offer represents a 24% premium to Bitfarms’ one-month volume-weighted average stock price as of May 24, 2024.
Following the Riot acquisition, shareholders will own 17% of Bitfarms.
Riot Platforms, already Bitfarms’ largest shareholder with a 9.25% stake, initially requested a private offer from Bitfarms’ board of directors on April 22.
But after the proposal was rejected, Riot has now made it public.
The transaction includes cash and common stock, and Bitfarms shareholders will own approximately 17% of the combined entity.
Dispute with former Bitfarms CEO
The timing of Riot’s bid coincides with a period of transition and turmoil in Bitfarms’ management. The company has been struggling following the departure of CEO Geoffrey Morphy, who was fired in May following a legal dispute.
Morphy’s sudden departure and subsequent lawsuits against Bitfarms for breach of contract and wrongful termination have raised questions about the company’s leadership stability and governance practices.
Riot Platforms seized on these developments to assert its takeover claim, arguing that certain directors, including Bitfarms co-founders Nicolas Bonta and Emiliano Grodzki, may not be acting in the best interests of shareholders.
Riot promised to push for the addition of new outside directors to the Bitfarms board of directors through an extraordinary general meeting of shareholders scheduled after the regular general meeting of shareholders on May 31.
Bitfarms’ Disappointing Returns Compared to Riot Platform
In particular, Bitfarms’ disappointing 2023 earnings despite costly technology upgrades have contributed to its vulnerability.
Bitfarms’ April revenue was down 29% year-on-year, although analysts had expected better performance after the Bitcoin halving.
In contrast, Riot reported a 131% increase in net profit to $211 million in the first quarter of 2024.
If successful, the combined entity will emerge as the largest publicly traded Bitcoin miner, boasting significant in-house mining and power capacity.
Riot Platforms plans to leverage this increased scale and operational efficiency to drive future value creation for shareholders and strengthen its competitiveness in the rapidly growing cryptocurrency mining industry.