Bitcoin mining company Bitfarms Ltd. has announced its acquisition of Stronghold Digital Mining, valued at approximately $125 million, including an assumed debt of about $50 million.
Deal Terms
Ben Gagnon, CEO of Bitfarms, stated that the acquisition will add power capacity by up to 307 megawatts, positioning the mining firm to expand its energy portfolio to over 950 megawatts by the end of 2025. As part of the deal, Stronghold shareholders will receive 2.52 Bitfarms shares for each share held. That’s a premium of around 70 percent of Stronghold’s 90-day volume-weighted average price on Nasdaq as of Aug. 16.
Market Reaction
After the news on the acquisition came out, Stronghold’s shares surged approximately 55% in pre-market trading on Nasdaq, reaching $4.55. This reaction underscores investor optimism about the acquisition and its potential impact on shareholder value.
Stronghold's Financial Performance
Stronghold Digital Mining, which had been exploring sale options for some time, had recently filed a registration statement in April to sell up to $250 million in securities to address its debt. For the first quarter of 2024, Stronghold reported revenues of $27.5 million, marking a 27% increase from the previous quarter and a 59% rise year-over-year. The revenue breakdown included $26.7 million from cryptocurrency operations, $700,000 from energy sales, and $100,000 from other activities.
The acquisition of Stronghold Digital Mining by Bitfarms represents a significant expansion of its power capacity and growth potential. The increase in Stronghold's share price on the stock market suggests a positive investor response to the news.
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