• Riot Platforms offers $950M to acquire Canadian Bitcoin miner Bitfarms.
• Bitfarms is facing leadership turmoil amid CEO Geoffrey Morphy’s lawsuit.
• The merger would create largest publicly listed Bitcoin miner by capacity.

Riot Platforms, a prominent Bitcoin miner and Bitfarms’ largest shareholder, has made a hostile takeover offer of $950 million for Bitfarms, a Canadian Bitcoin mining company.

Riot’s buyout offer represents a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24, 2024.

Shareholders to own 17% of Bitfarms after Riot’s takeover

Riot Platforms, already the largest shareholder in Bitfarms with a 9.25% stake, had initially approached Bitfarms’ board with a private offer on April 22.

However, following the rejection of the offer, Riot has now taken the proposal public.

The deal would involve a combination of cash and common stock, with Bitfarms shareholders standing to own approximately 17% of the merged entity.

Bitfarms’ disputes with former CEO

The timing of Riot’s bid coincides with a period of transition and turmoil within Bitfarms’ management. The company has been grappling with the departure of its CEO, Geoffrey Morphy, who was dismissed in May amidst a legal dispute.

Morphy’s abrupt exit and subsequent lawsuit against Bitfarms for breach of contract and wrongful dismissal have raised questions about the company’s leadership stability and governance practices.

Riot Platforms has seized upon these developments to assert its case for the acquisition, alleging that certain directors, including Bitfarms’ co-founders Nicolas Bonta and Emiliano Grodzki, may not be acting in the best interests of shareholders.

Riot has pledged to push for the addition of new, independent directors to Bitfarms’ board through a special shareholders meeting scheduled after the company’s upcoming Annual General and Special Meeting on May 31.

Bitfarms’ disappointing earnings compared to Riot Platforms

Notably, Bitfarms’ disappointing earnings in 2023, despite a costly technical upgrade, have contributed to its vulnerability.

Analysts had expected better performance post-Bitcoin halving, but Bitfarms’ April earnings dropped 29% year-on-year.

In contrast, Riot reported a 131% increase in net income in Q1 2024, reaching $211 million.

If successful, the combined entity would emerge as the largest publicly listed Bitcoin miner, boasting significant self-mining and power capacities.

Riot Platforms envisions leveraging this enhanced scale and operational efficiency to drive future value creation for shareholders and strengthen its competitive position in the burgeoning cryptocurrency mining industry.