Riot’s CEO claims Bitfarms is not acting in the best interests of shareholders over its rejection of the takeover

Riot Platforms announced a proposal to acquire Bitfarms for $2.30 per share. This acquisition would create the world’s largest publicly traded Bitcoin mining company, providing significant shareholder value. Riot has already acquired a 9.25% stake in Bitfarms, becoming its largest shareholder, and plans to request an extraordinary meeting of Bitfarms shareholders to add new independent directors to the board.

The proposal includes a premium of 24% to the monthly volume-weighted average share price of Bitfarms as of May 24, 2024 and a premium of 20% to the share price of Bitfarms as of April 19, 2024. The consideration includes cash and shares of Riot common stock , which will potentially enable Bitfarms shareholders to own approximately 17% of the combined company. This proposal was reportedly delivered privately on April 22, but was rejected by Bitfarms’ board without substantive dialogue.

Riot argues that combining the companies would bring significant strategic and financial benefits, including a vertically integrated Bitcoin mining company with a current mining capacity of approximately 1 GW and a current mining capacity of 19.6 EH/s, expanding to 1.5 GW and 52 EH /s until the end of the year. This scale would position the combined entity as the largest Bitcoin mining company in the world.

The combination will increase geographic diversification, with 15 facilities in the United States, Canada, Paraguay and Argentina offering up to 2.2 GW of generating capacity when fully developed. Riot’s solid financial profile, including over $700 million in cash and minimal corporate debt, will support Bitfarms’ growth plans and improve access to public equity markets.

Benjamin Yi, executive chairman of Riot, emphasized the strategic fit and growth potential, while expressing disappointment at Bitfarms’ quick rejection of the proposal. CEO Jason Les has raised concerns about Bitfarms’ management, citing the CEO’s sudden firing and related allegations as troubling signs.

“We are deeply concerned that the founders on the Bitfarms board – Nicolas Bonta and Emiliano Grodzki – may not be acting in the best interests of all Bitfarms shareholders. The sudden dismissal of Bitfarms CEO without a transition plan (…) raises serious questions about governance.”

The proposal, unanimously approved by Riot’s Board of Directors, is non-binding and subject to customary terms and conditions. Citi is Riot’s financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Davies Ward Phillips & Vineberg LLP are its legal advisors. Riot says it remains committed to pursuing this acquisition with the goal of creating a leading Bitcoin mining company with enhanced operational and financial capabilities.

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