- Partnership Based on Mutual Benefits
- Significance of the Merger Deal to Stronghold
- Riot Platform Continues to Crackdown on Bitfarms
Bitcoin mining companies Bitfarms and Stronghold Digital Mining recently finalized a merger agreement. Bitfarms announced its agreement to purchase Stronghold Digital in a stock-for-stock merger deal.
Partnership Based on Mutual Benefits
The acquisition cost is about $125 million in stock, equivalent to 2.52 Bitfarms shares for each Stronghold share. This deal represents a 71% premium to Stronghold’s 90-day volume-weighted average price. Bitfarms will also take on Stronghold’s debt valued at $50 million. Bitfarms CEO Ben Gagnon stated that the merger deal will significantly increase the company’s presence in the US and aims to expand its energy portfolio to over 950 megawatts (MW) by the end of 2025. Stronghold plans to boost its power capacity to 307 MW. Both companies anticipate the merger will create $10 million in yearly cost synergies. Upon the merger announcement, Stronghold Digital’s stock in pre-market trading boosted to almost 60%, while Bitfarms stock fell around 8%.
Significance of the Merger Deal to Stronghold
This deal comes as a relief for the Pennsylvania-based Bitcoin miner, considering its enormous debts. In 2021, Stronghold filed for an Initial Public Offering (IPO), but had to send back more than 26,000 mining tools to New York Digital Investment Group (NYDIG) to significantly reduce its debt. Now that Bitfarms has taken over $50 million worth of debt, Stronghold can focus on its growth and development.
Riot Platform Continues to Crackdown on Bitfarms
Bitfarms is still defending itself against Riot Platforms’ (RIOT) acquisition attempt. The Canadian-based Bitcoin miner was using a “poison pill” defense strategy against RIOT, which was put to an end by a Canadian Tribunal in July. This followed RIOT’s withdrawal of its bid to purchase the company. In the same month, Bitfarms boosted its Bitcoin production, leaving its treasury at 905 Bitcoins worth over $57 million. Riot changed its strategy and is now focused on changing Bitfarms’s board members. Currently, RIOT holds nearly 19% of Bitfarms.
This agreement between Bitfarms and Stronghold Digital represents a significant step for both companies in achieving their strategic plans and development in the Bitcoin mining market.
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