Bitcoin mining company Riot Platforms has made a generous offer to acquire Bitfarms at a higher price than its current share value. After being rejected by Bitfarms, Riot has decided to make its intentions public. As the largest shareholder of Bitfarms with a 9.25% stake, Riot has proposed a combination of cash and common stock that would be valued at approximately $950 million. This offer represents a 24% premium over Bitfarms’ average share price for the past month. If the deal goes through, Bitfarms shareholders would own around 17% of the merged company. Riot stated that this acquisition would provide Bitfarms shareholders with the opportunity for future value creation by participating in a financially stronger company with a clear strategy and an experienced management team.
Bitfarms is currently in the process of finding a new CEO, as announced in a statement on March 25. The company had initially planned to keep its then-CEO Geoffrey Morphy on board while searching for a replacement. However, Morphy later sued Bitfarms for breach of contract, wrongful dismissal, and damages, demanding $27 million. Bitfarms terminated Morphy on May 13 and appointed Nicolas Bonta, the chairman and co-founder, as his replacement. Riot has specifically named Bonta and Emiliano Grodzki, the other co-founder, as the directors in question and has expressed its intention to add new independent directors to the Bitfarms Board.
In 2023, Bitfarms experienced disappointing earnings compared to the previous year. The company underwent an expensive technical upgrade in anticipation of the Bitcoin halving. Analysts had high expectations for Bitfarms after the halving, but its April earnings dropped by 29% compared to the previous year. In contrast, Riot saw a substantial increase of 131% in net income during the first quarter of 2024, reaching $211 million. However, Riot has not released any financial information since then. If the acquisition is successful, the combined company would have the largest capacity of any publicly listed Bitcoin miner, with a current power capacity of approximately 1 GW and a self-mining capacity of 19.6 EH/s. By the end of the year, Riot aims to increase the power capacity to 1.5 GW and the self-mining capacity to 52 EH/s.
At the time of publication, Bitfarms had not responded to a request for comment from Cointelegraph.