Bitfarms Opposes Riot Blockchain Takeover

After days of news of Riot Blockchain’s interest in Bitfarms, the cryptocurrency mining company is taking steps to make the takeover more difficult.

In fact, Bitfarms has adopted a shareholder rights plan that would only allow a hostile takeover attempt in very limited circumstances.

Riot Blockchain and the development of cryptocurrency mining

Riot Blockchain, now known as Riot Platforms, is a publicly traded cryptocurrency mining company.

A few days ago, the news spread that he was looking for new solutions to compensate for the decline in revenue caused by the Bitcoin halving.

The halving that took place on April 20 halved miners’ pay, but competition did not decrease much.

Taking weekly averages from the Hashrate Index, Bitcoin’s hashrate increased from 650 Eh/s on April 19 to the current 604, decreasing by only 7% after the halving.

Mining is a competition in which people with higher hashrate earn more, so miners are effectively incentivized to keep their hashrate as high as possible.

Only thanks to halving, the revenue from rewards was halved, and since it is the hashrate that consumes electricity and, therefore, generates the highest costs, miners now have a problem.

Mining profitability collapsed after the halving, falling from around $0.11 per day per THash/s to the current $0.05, more than halving. This level is currently at an all-time low.

DISRUPTIONS on the stock exchange

Riot Platforms is listed on the Nasdaq exchange with the ticker RIOT.

After hitting yearly highs in February, when its share price rose above $17, it fell below $8 in the month and a half leading up to the halving, losing more than half its value.

Investors and speculators were afraid that the company might have problems as a result of the halving, and in fact they were right.

However, the price later increased to the point where it is now just under $10.

However, the current price level is close to the 2024 lows and is in line with what RIOT shares were trading in mid-December 2023 before the start of the rally.

However, it is worth noting that it is higher than the one in October and November, when it was even below $9, and especially since it is much higher than the one at the end of 2022, when it dropped to almost $3.

However, it is important to emphasize that 2021’s all-time highs are still a long way off, considering they have reached almost $80.

The difference between almost $80 in February 2021 and $17 in February 2024 speaks volumes about how excessive FOMO was at the time, as well as how much financial markets “punished” Riot ahead of the halving due to the inevitable fallout. the event would have an impact on your income.

Bitfarms acquisition

Among the various solutions that Riot Platforms is trying to master to reduce losses are mergers and acquisitions.

In particular, he highlighted Bitfarms, another American cryptocurrency mining company.

Anche Bitfarms is an amount in Borsa al Nasdaq, with the ticker BITF, and the second part of RIOT is an amount from $ 1.8, BITF is an amount quasi 4.2%. On the secondary market ha poi recuperato un misero 0.4%.

However, in the medium and long term, BITF shares underperform RIOT, as compared to $1.1 at the end of 2023, the current price of $2.3 is much higher.

Moreover, in percentage terms it is less distant from the historical highs of 2021 compared to RIOT, and has gained a lot from 0.4% at the end of 2022.

So it really looks like Riot Platforms is looking to incorporate a competing company that, at least on the stock market, is doing better.

It should be noted that RIOT has a capitalization of USD 2.8 billion, while BITF has a capitalization of less than USD 900 million, so it is three times smaller.

Crypto Mining: Bitfarms Opposition to OPA Riot Blockchain

However, Bitfarms did not want to be taken over.

It should be noted that Bitfarms is a “public” company, as as many as 75% of its shares are on the market (in borsa).

So theoretically, Riot Platforms should have no major problems with announcing a hostile takeover bid against it, provided it offers shareholders an interesting sale price.

However, the company responded by attempting to resist this hostile takeover by developing a shareholder rights plan that would only allow a hostile takeover in very limited circumstances.

In fact, the plan provides that if one entity manages to acquire at least 15% of the shares by September 20 and then, without the consent of the management board, increases its share to 20%, the remaining shareholders will be able to purchase ordinary shares at a significant discount compared to the market price. .

Bitfarms is a Canadian company and in Canada these funds are permitted by law. As a result, Riot could still make a hostile takeover bid, but its shares would be diluted after purchasing shares on the market.

Riot is actually already a shareholder in Bitfarms, and in fact the climb has already begun, considering that today it should have become the largest single shareholder with over 11% of the shares.

Moreover, during Bitfarms’ recent shareholder meeting, its co-founder, Emiliano Grodzki, was removed from the board of directors.

In other words, there is a real internal dispute going on at Bitfarms between Riot, which is trying to take it over, and the remaining shareholders who do not want the company to be taken over in this way.