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Tag: Riot

  • Riot Platforms wants to buy Bitfarms for $950 million

    Riot Platforms wants to buy Bitfarms for $950 million

    Riot Platforms wants to buy Bitfarms for $950 million
    • 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.

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  • Riot Platforms and Texas Blockchain Council challenge EIA’s Bitcoin Mining data demands

    Riot Platforms and Texas Blockchain Council challenge EIA’s Bitcoin Mining data demands

    • TBC and Riot Platforms sue EIA over Bitcoin data demands, alleging intrusion.
    • Senator Warren’s involvement is seen as part of a broader political strategy.
    • Bitcoin mining faces scrutiny for energy consumption, environmental impact.

    In a bold move against the US Energy Information Administration (EIA), the Texas Blockchain Council (TBC) and crypto miner Riot Platforms have filed a lawsuit, alleging unlawful data collection demands targeting the Bitcoin mining sector.

    EIA’s data collection plan 

    Last month, the EIA announced plans to collect data on electricity consumption by certain US-based crypto miners, effective from early February. Commercial miners were mandated to disclose intricate details, including the types of machines used and the locations of their mining operations. The controversial move followed an emergency approval from the Office of Management and Budget on January 26.

    TBC, a non-profit association, expressed concerns over the sensitive nature of the information requested, fearing potential public disclosure. The council sees this as a direct assault on private businesses, characterizing it as a political manoeuvre under the guise of an emergency.

    The TBC points fingers at Senator Elizabeth Warren and the Biden administration, accusing them of orchestrating a targeted effort against the digital asset industry. The EIA’s push for oversight is viewed as an intrusion and a worrying escalation in monitoring and regulating the cryptocurrency sector.

    As part of a broader strategy, Senator Warren and other Democratic lawmakers had previously urged major US crypto mining companies to disclose their energy usage. The current legal action represents a firm industry backlash against what is perceived as increased regulatory scrutiny.

    Bitcoin Mining realities and environmental considerations

    The EIA, in a report dated February 1, highlighted a significant jump in annual electricity consumption by crypto miners, from 0.6% to 2.3%. Despite the benefits of Bitcoin mining, such as network decentralization and profit opportunities, the industry faces growing scrutiny due to its environmental impact.

    The Rocky Mountain Institute estimates global Bitcoin mining consumes around 127 terawatt-hours annually. This has sparked debates about the environmental sustainability of the industry. Proponents argue that compared to traditional sectors like banking, Bitcoin’s energy usage is relatively lower, but critics remain concerned about its contribution to global energy consumption.

    As the legal battle unfolds, the cryptocurrency industry finds itself at the crossroads of regulatory pressures and environmental accountability, navigating the delicate balance between innovation and responsibility.

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  • Riot Platforms stock has moved to a bear market: buy the dip?

    Riot Platforms stock has moved to a bear market: buy the dip?

    Riot Platforms (NASDAQ: RIOT) stock price has drifted downwards in the past few days as Bitcoin and other cryptocurrencies retreated. The shares retreated to a low of $11.48 in the pre-market session. This means that the stock has dropped by more than 20% from the year-to-date high, meaning that it has moved to a bear market.

    Is it safe to buy the dip?

    Riot Blockchain is one of the biggest Bitcoin mining companies in the world. It competes with the likes of Argo Blockchain and Marathon Digital among others. Therefore, as in the other mining industry, these companies have a close correlation with the price of the underlying asset.

    This explains why the Riot Platforms stock price has jumped sharply this year. Between the lowest point in 2022 and the year-to-date high, RIOT shares were up by more than 338%, making it one of the best-performing stocks in the market.

    Therefore, to predict whether the Riot Blockchain stock price will bounce back, we need to understand why Bitcoin is falling and whether it will bounce back soon. As I wrote in this article, the main reason for the crash is that bullish liquidations have jumped in the past two days.

    Liquidations happen when brokers and exchanges forcefully close positions of leveraged positions. Therefore, this usually puts prices under pressure.

    Another reason why this happened is that Bitcoin recently rose above the key resistance level at $30,000. Historically, cryptocurrencies tend to be a bit volatile when they move above or below a key support or resistance level. 

    The other reason is that several regional banks, including Western Alliance Bancorp, published strong results. Its inflows rose by more than $3 billion. As such, the risks of a banking crisis seens like they have been minimized. In a note, analysts at Bernstein said:

    “Any potential dislocation, whether on the bank’s credit side, or on the sovereign side …positions bitcoin perfectly as a safe-haven asset alongside gold.”

    Therefore, there is a likelihood that Bitcoin price will bounce back in the coming months as the Fed starts to pivot.

    Riot Platforms stock price forecast

    The daily chart shows that the RIOT share price formed a shooting star pattern on Wednesday. In technical analysis, this pattern is usually a bearish sign. The stock has jumped by more than 25-day and 50-day exponential moving averages. 

    It remains slightly above the key support level at $10.53, the highest level on 11th August. Therefore, I suspect that the shares will drop to the key support at $10.53. The stock will then resume the bullish trend as buyers target the year-to-date high of $14.51.

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