1. Key Concerns Raised by Riot Platforms
2. Governance Issues at Bitfarms
3. Shareholder Impact and Future Direction

Riot Platforms, the largest shareholder of Bitcoin mining company Bitfarms, publicly opposed Bitfarms' recent $175 million acquisition of Stronghold Digital Mining in an open letter released on September 3.

Key Concerns Raised by Riot Platforms

The letter from Riot Platforms outlined several major issues surrounding the deal, the most significant being the acquisition price and its timing. Riot Platforms emphasized that the $175 million paid for Stronghold Digital Mining was much higher than the company’s market value at the time of the acquisition: * **100% Premium on Stronghold’s Market Price:** Riot Platforms pointed out that the acquisition price was applied at a 100% premium to Stronghold’s market price at the time of the deal. Riot argued that this was significantly more than what shareholders should be paying, calling the price unjustified given Stronghold’s current valuation. * **Concerns About Timing:** Riot Platforms also expressed concerns about the timing of the acquisition, suggesting that Bitfarms may have rushed into the deal without fully considering the market conditions or the impact on shareholders. The open letter stressed that the acquisition was made at a time when Stronghold’s stock was trading at a lower price.

Governance Issues at Bitfarms

Beyond the financial concerns surrounding the Stronghold acquisition, Riot Platforms criticized Bitfarms’ governance practices, calling them 'broken.' While Riot acknowledged that the acquisition could strengthen Bitfarms’ board of directors, it argued that this change alone would not be sufficient to address the deeper governance problems at the company. * **Board and Leadership Criticism:** Riot’s letter suggests that Bitfarms’ governance structure needs a more comprehensive overhaul to protect shareholders’ interests and make more prudent financial decisions. Riot Platforms urged Bitfarms to take further steps to improve transparency and accountability at the board level.

Shareholder Impact and Future Direction

The dispute highlights the tension between Bitfarms’ leadership and its largest shareholder. Riot Platforms has made it clear that it views the Stronghold deal as detrimental to shareholder value, both in terms of its high cost and the timing of the acquisition. * **Shareholder Concerns:** As the largest shareholder, Riot’s concerns are likely to resonate with other investors, potentially leading to increased pressure on Bitfarms to reconsider its governance practices and future acquisitions. Riot’s open letter could also influence shareholder sentiment ahead of the board vote scheduled for October 29, where governance issues may come to the forefront. * **Long-Term Strategy:** While Bitfarms aims to expand its mining capabilities with the acquisition of Stronghold, Riot’s opposition raises questions about whether the company is balancing growth with shareholder interests. The disagreement suggests that Bitfarms may need to reassess its long-term strategy and ensure that future moves are more closely aligned with the expectations of its shareholders.

The dispute underscores the growing tensions within Bitfarms as its largest shareholder questions the company’s recent $175 million acquisition of Stronghold Digital Mining. Riot Platforms’ criticism of the deal’s premium pricing and the timing of the acquisition, along with its concerns about Bitfarms’ governance, signals a potential rift between the company’s leadership and its shareholders. As the situation unfolds, the upcoming board vote in October may provide an opportunity for shareholders to voice their concerns and influence the direction of Bitfarms’ governance and financial strategy.