Bitcoin miner Riot Platforms announced an offer to acquire Bitfarms at a significant premium over its share price. Riot made an offer to the board of the smaller Canadian competitor on April 22 and reported developments after the offer was rejected. Colorado-based Riot is already the largest shareholder of Bitfarms with a 9.25% stake.
What’s Happening at Riot Platforms?
The company offered shareholders approximately $950 million in equity value or a combined cash and common stock representing a 24% premium over Bitfarms’ volume-weighted average share price for the month ending May 24, 2024. Riot shared the following statement regarding the offer:
“Bitfarms shareholders can join a financially and commercially stronger company managed by an established and proven management team, potentially creating future value.”
Bitfarms’ management is in transition, searching for a new CEO. The company announced its search on March 25, and then-CEO and president Geoffrey Morphy expressed confidence in the management team’s ability to achieve the 2024 growth targets. Initially, Bitfarms intended to keep Morphy while searching for his replacement. On May 10, Morphy filed a lawsuit against the company for breach of contract, wrongful termination, and compensation, demanding $27 million. Bitfarms terminated Morphy on May 13 and appointed president and co-founder Nicolas Bonta as his replacement.
Riot identified co-founders Bonta and Emiliano Grodzki as the relevant executives. The company stated it would request a special Bitfarms shareholders meeting to add new qualified and independent directors to the Bitfarms Board after the May 31 Annual General and Special Meeting.
Details of the Process
Bitfarms showed disappointing earnings on an annual basis in 2023. It began a costly technical upgrade in preparation for Bitcoin halving events. Analysts expected Bitfarms to perform well post-halving, but April earnings fell 29% compared to the previous year. Riot’s net income increased by 131% to $211 million in the first quarter of 2024. It has not released financial information since then.
According to Riot, a combined company would have approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity, with up to 1.5 GW of power capacity and 52 GW, making it the largest capacity among any publicly traded Bitcoin miner.
