Canadian crypto mining company Bitfarms has entered a definitive merger agreement with U.S.-based Stronghold Digital in a stock-for-stock transaction valued at $175 million, including assumed debt.
Deal Details
Canadian mining giant Bitfarms is acquiring its U.S.-based competitor Stronghold Digital. The total transaction value is approximately $175 million, including $125 million in equity value and $50 million of assumed debt. In an August 21 press release, Bitfarms stated that acquiring Stronghold would bring significant assets, including a 4.0 EH/s hashrate and 165 MW of power capacity by June 2024. The company also owns over 750 acres of land and two power plants in Pennsylvania. Despite the news, Bitfarms shares (BITF) dropped 7.2% to $2.19 in pre-market trading.
Bitfarms Portfolio Expansion
The merger, expected to close in the first quarter of next year pending shareholder and regulatory approvals, will expand Bitfarms' energy portfolio by increasing its capacity to over 950 MW by the end of 2025, with potential future expansions bringing total capacity to 1.6 GW. Bitfarms' CEO Ben Gagnon labeled the acquisition a transformative step, noting the company expects to have 'multi-year expansion capacity visibility up to 1.6 GW, with approximately 66% in the U.S., up from approximately 6% today.'
Competition with Riot Platforms
The merger, which has received unanimous approval from both companies' boards, is expected to close in the first quarter of next year, pending shareholder and regulatory approvals. Under the agreement, Stronghold shareholders will receive 2.52 Bitfarms shares for each share owned, representing a 71% premium to Stronghold's 90-day volume-weighted average price on the Nasdaq as of August 16. The combined company is projected to achieve $10 million in annual cost synergies post-merger. The merger announcement comes as Bitfarms faces a takeover attempt by Riot Platforms, a competing Bitcoin mining company. Riot recently acquired 1 million common shares of Bitfarms, raising its stake to approximately 18.9%. This move followed Riot's $950 million takeover bid earlier this year, which was withdrawn after failing to gain traction with Bitfarms' board.
The acquisition of Stronghold Digital by Bitfarms will expand its presence in the crypto mining market and increase its energy capabilities, while strengthening its position against competition from Riot Platforms.
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