Tensions between Bitcoin mining giants Riot Platforms and Bitfarms have escalated as Riot Platforms increased its stake in Bitfarms to 14% following a rejected takeover bid. Riot’s continued share acquisitions come after Bitfarms deemed the initial takeover offer insufficient.
In April, Riot Platforms, headquartered in Colorado, offered to buy Bitfarms’ remaining shares at $2.30 each, an offer Toronto-based Bitfarms rejected, citing undervaluation. Bitfarms’ share price stood at $2.81 before the market opened on Friday. Despite the rejection, Riot purchased an additional 1.4 million Bitfarms shares for nearly $3.9 million on Thursday, raising its total ownership to 14%.
Riot has not ruled out the possibility of adjusting its position in Bitfarms and plans to call a special shareholder meeting to nominate “well-qualified and independent” directors, citing concerns over Bitfarms’ corporate governance. This follows the ousting of Bitfarms CEO Geoffrey Morphy, who subsequently filed a statement of claim against the company in the Superior Court of Ontario.
In response, Bitfarms has implemented a shareholder rights plan, attaching a “right” to each common share issued after June 20. These rights become exercisable if an owner holds at least 15% of Bitfarms’ outstanding shares between June 20 and September 10, aiming to limit the control of shareholders like Riot during the strategic review process.
Bitfarms emphasized that the plan does not preclude Riot or other shareholders from making unsolicited takeover bids. Instead, it aims to preserve the integrity of the company’s review process as it evaluates the best path forward. “Riot’s comments reflect their frustration at being unable to sway the process in favor of their opportunistic, non-binding offer,” Bitfarms stated.
Riot Platforms, primarily operating in Texas, boasts a deployed hash rate of 14.7 exahash per second (EH/s). Bitfarms reported an operating hash rate of 7.5 EH/s at the end of May, with plans to increase this to 21 EH/s by year-end.
A potential Riot takeover of Bitfarms would mark the first major consolidation between publicly traded miners post-Bitcoin halving, an event that reduced per-block mining rewards from 6.25 BTC to 3.125 BTC. While some industry analysts predicted consolidation due to operational struggles following the halving, Architect Partners’ Elliot Chun noted that large public miners might only merge if they operate in different regions.