Riot Platforms' Offer to Acquire Bitfarms

*Bitcoin miner Riot Platforms has made a lucrative offer to acquire Bitfarms at a premium above its current share price. This move comes as Riot, already holding a significant stake in Bitfarms, proposed the acquisition to the smaller Canadian competitor's board on April 22. Although the offer was initially declined, Riot has proceeded to share further developments.

Insights into Riot Platforms

The offer presented by Riot Platforms includes a substantial $950 million equity value or a mix of cash and common stock, representing a generous 24% premium over Bitfarms' volume-weighted average share price leading up to May 24, 2024. In response to the offer, Riot conveyed the following message:

"Bitfarms shareholders have the opportunity to align with a financially robust and commercially adept entity overseen by an experienced and proven management team, potentially unlocking future value."

Meanwhile, Bitfarms is undergoing management changes as it seeks a new CEO. The search for a new leader was officially announced on March 25, with former CEO and president Geoffrey Morphy expressing confidence in the management team's ability to meet the growth targets set for 2024. Initially, Bitfarms planned to retain Morphy during the search for a successor. However, on May 10, Morphy initiated legal action against the company, citing breach of contract, wrongful termination, and seeking $27 million in compensation. Subsequently, Bitfarms terminated Morphy's employment on May 13, appointing president and co-founder Nicolas Bonta as the new CEO.

Riot has pinpointed co-founders Bonta and Emiliano Grodzki as pivotal figures within Bitfarms. The company has outlined its intention to call for a special shareholders meeting at Bitfarms to introduce new competent and independent directors to the Board following the Annual General and Special Meeting on May 31.

Process Details

Bitfarms experienced underwhelming annual earnings in 2023, embarking on a costly technical overhaul in anticipation of Bitcoin's halving events. Although market analysts anticipated a positive performance by Bitfarms post-halving, April's earnings witnessed a 29% decline compared to the previous year. Conversely, Riot reported a significant 131% surge in net income to $211 million in the first quarter of 2024, with no subsequent financial disclosures made.

Riot indicates that a merged entity would boast a collective current power capacity of around 1 GW and 19.6 EH/s of current self-mining capacity, potentially scaling up to 1.5 GW of power capacity and 52 GW, positioning it as the leading capacity holder among publicly traded Bitcoin miners.

Sources: - Riot Platforms Offers to Acquire Bitfarms at a Premium - Bitcoin ETFs Balancing Investment Appeal with Custody Risks - Newslinker