Riot Acquires Bitfarms Stake, CEO Calls Out Takeover Defense
The battle between cryptocurrency mining companies Riot Platforms and Bitfarms has intensified. Riot’s CEO, Jason Les, strongly opposes a strategy implemented by Bitfarms to hinder a potential takeover.
On June 11th, a filing with the US Securities and Exchange Commission revealed that Riot had acquired roughly six million common shares of Bitfarms across three separate trades. This purchase, valued at over $111 million at the time, combined with previous acquisitions, brought Riot’s total stake in Bitfarms to 13.1%.
Bitfarms Enacts “Poison Pill” Defense
In a move seen as a defense against a potential acquisition, Bitfarms announced a shareholder rights plan on June 10th. This plan, often referred to as a “poison pill,” aims to make it more difficult for Riot to acquire a controlling stake in the company. Specifically, it seeks to prevent Riot from acquiring 15% or more of Bitfarms’ shares. By diluting the value of Bitfarms’ shares if a larger stake is acquired, this strategy discourages potential takeovers.
Riot CEO Criticizes Defensive Tactics
In a statement released on June 12th, Les slammed the Bitfarms plan, calling it “in direct conflict with established legal and governance standards.” He specifically criticized the lowered threshold of 15% compared to the “customary 20%” used in such plans. Bitfarms, however, maintains that the shareholder plan still allows Riot to pursue its takeover ambitions “in accordance with applicable Canadian securities laws.”
Takeover Bid and Soaring Stock Prices
In May, US-based Riot offered to acquire Bitfarms, based in Canada, for $950 million. This offer represented a significant premium, at 24% above Bitfarms’ one-month volume-weighted average share price as of May 24th. Notably, Bitfarms’ stock price on the Nasdaq has surged by more than 56% in the past 30 days, likely fueled by the takeover saga.
Internal Turmoil at Bitfarms
In May, Bitfarms experienced further upheaval with the resignation of its former CEO, Geoffrey Morphy, who filed a lawsuit against the company. Nicolas Bonta has been serving as interim president and CEO while Bitfarms searches for a permanent replacement. Les used this opportunity to call for Bonta’s removal, claiming he “bears direct responsibility for [Bitfarms’] poor corporate governance practices.”
This escalating battle between Riot and Bitfarms underscores the consolidation trends within the cryptocurrency mining industry. It remains to be seen how this unfolds and who will ultimately emerge victorious.
