Bitcoin mining company Riot Platforms has made a generous offer to acquire Bitfarms at a premium price. After being rejected, Riot has now made its intentions public. As the largest shareholder of Bitfarms with a 9.25% stake, Riot has proposed a combined cash and stock offer that values the company at approximately $950 million, representing a 24% premium over Bitfarms’ average share price. If the deal goes through, Bitfarms shareholders would own around 17% of the merged company.
Riot stated that this offer would provide Bitfarms’ shareholders with the potential for future value creation by participating in a financially and commercially stronger company led by an experienced management team with a well-defined strategy.
Bitfarms is currently undergoing a management transition as it searches for a new CEO. The company originally planned to retain its former CEO, Geoffrey Morphy, while searching for a replacement. However, Morphy subsequently sued Bitfarms for breach of contract, wrongful dismissal, and damages, seeking $27 million. He was subsequently fired, and Nicolas Bonta, the chairman and co-founder, was appointed as his temporary replacement. Riot has highlighted Bonta and co-founder Emiliano Grodzki as the directors in question and plans to request a special shareholders meeting to add new independent directors to the Bitfarms Board.
Bitfarms had disappointing earnings in 2023, despite investing heavily in a technical upgrade for the Bitcoin halving. Analysts had expected better performance after the halving, but the company’s April earnings dropped by 29% compared to the previous year. In contrast, Riot reported a 131% increase in net income in the first quarter of 2024, reaching $211 million. However, Riot has not released any financial information since then.
Riot claims that if the merger goes ahead, the combined company would have the largest capacity of any publicly listed Bitcoin miner, with approximately 1 GW of power capacity and 19.6 EH/s of self-mining capacity, increasing to 1.5 GW and 52 EH/s by the end of the year.
Bitfarms has yet to respond to requests for comment.