Riot Platforms Offers $950M Buyout for Bitfarms

Riot Platforms offered a $950M buyout for Bitfarms after a private offer to the board was rejected in April.

Bitcoin miner Riot Platforms has acquired bit farms for a substantial premium over its current share price. Riot extended an offer to the board of its smaller Canadian competitor on April 22. Following the rejection of that offer, Riot is now disclosing its intentions.

With a 9.25% stake, Riot, based in Colorado, is already the largest shareholder of Bitfarms.

A combined cash and joint stock offering of approximately $950 million in equity value, or a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24, 2024, has been made to shareholders. A shareholder of Bitfarms would possess approximately 17% of the merged company.

Riot stated that the offer “would afford Bitfarms’ shareholders the opportunity to create future value by investing in a financially and commercially robust organization guided by a seasoned and established management team, with a clearly defined strategy.”

As Bitfarms searches for a new CEO, the organization’s leadership is undergoing a transition. In a statement dated March 25, the organization declared its search.

In that statement, former president and CEO Geoffrey Morphy conveyed his “utmost confidence that the management team will achieve our growth objectives by 2024.” Bitfarms initially intended to retain Morphy while searching for a replacement.

On May 10, Morphy filed a $27 million lawsuit against the company, alleging breach of contract, unlawful termination, and damages. On May 13, Bitfarms terminated his employment and appointed co-founder and chairman Nicolas Bonta to succeed him. Riot stated,

“New allegations in a lawsuit brought by Bitfarms’ recently terminated CEO, if accurate, raise serious questions about whether certain directors are committed to acting in the best interests of all shareholders.”

Riot subsequently identified Emiliano Grodzki and Bonta, co-founders, as the directors of the issue. It stated that it would request a special Bitfarms shareholders meeting following the organization’s Annual General and Special Meeting on May 31 to “additionally appoint independent, highly qualified directors to the Bitfarms Board.”

In 2023, Bitfarms reported unsatisfactory year-over-year earnings. It initiated an expensive technological upgrade in anticipation of the halving of Bitcoin. Bitfarms was anticipated to perform well by analysts following the halving.

Nonetheless, April earnings were 29% lower than last year’s. In the initial quarter of 2024, Riot achieved a net income growth of 131%, culminating in $211 million. Since then, no financial information has been disclosed.

A merged company would have the most capacity of any publicly traded Bitcoin miner, according to Riot, with “approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity; by the end of the year, it could reach 1.5 GW of power capacity and 52 EH/s of self-mining capacity.”

As of publication, Bitfarms has yet to respond to a request for comment from The Cointelegraph.