Bitcoin Miner Riot Withdraws Bid for Bitfarms, Pushes for Board Seats

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As a seasoned crypto investor with a keen interest in the Bitcoin mining industry, I’ve been closely following the developments between Riot Platforms and Bitfarms. The back-and-forth between these two companies has been intriguing, to say the least.

Riot Platforms, a Bitcoin mining company, has abandoned its offer to buy Bitfarms (NASDAQ: BITF) for $2.30 per share. Instead, Riot now aims to secure three positions on Bitfarms’ board in order to advance its plans of acquiring the bitcoin mining firm.

Previously, Riot Games proposed a $950 million buyout deal that Bitfarms declined. As a result, Riot initiated efforts to instate new board members in order to progress with negotiations.

Bitcoin Miner Riot Aims for Board Changes

On Monday, Riot Platforms announced that it has abandoned the acquisition process for Bitfarms and instead intends to overhaul Bitfarms’ current board of directors. However, the Riot Investment Trust, holding approximately 15% of Bitfarms’ shares, declared such a move impracticable due to the existing board’s obstruction of productive dialogue.

As a researcher examining this situation, I would interpret Riot’s announcement as indicating that significant adjustments to the board are essential for initiating meaningful discussions regarding a potential merger.

Three individuals have been put forward by Riot for consideration as new members of Bitfarms’ board of directors: John Delaney, a previous mayor of Jacksonville, Florida; Amy Freedman, a former CEO of Kingsdale Advisors; and Ralph Goehring, a former CFO in the energy industry. This proposal aims to enhance the autonomy and improve corporate governance within Bitfarms by adding these experienced candidates.

Riot Requisitions Special Meeting

Expert: Riot, a significant shareholder in Bitfarms, has initiated a call for a special meeting to address governance concerns at the company. During this gathering, shareholders will have the opportunity to cast votes on the removal of Nicolas Bonta, who currently serves as both Chairman and Interim CEO, and director Andrés Finkielsztain. Following this announcement, Bitfarms’ stock price took a hit, dropping approximately 5% to reach $2.94.

According to Riot, these individuals, as well as any new directors who have been appointed since Emiliano Grodzki’s exit from the company, are being blamed for the subpar governance and inability to maximize Bitfarms’ potential value.

At the same time, Riot has suggested replacing these current directors with their own appointments to restore confidence among shareholders and introduce fresh perspectives regarding a potential merger.

Previous Acquisition Efforts and Poison Pill Defense

Riot’s bid to obtain Bitfarms has involved numerous calculated moves and responses. In late June, Riot boosted its stake in Bitfarms by purchasing over six million shares, amounting to a significant investment of over $111 million. This transaction took place during a period when Bitfarms underwent leadership transitions; Geoffrey Morphy relinquished his role as CEO and was replaced by acting CEO Nicolas Bonta.

In response, Bitfarms implemented a shareholder rights plan, or “poison pill,” preventing any individual or entity from acquiring over 15% of the company without the board’s approval. Riot’s CEO, Jason Les, voiced opposition to this plan, arguing that it falls short of the typical 20% threshold in such situations and may raise legal concerns.

As a researcher studying the Bitcoin mining industry, I’ve observed that Bitfarms being taken over by Riot is just one piece of a larger puzzle. This trend is being influenced by economic shifts following the 2024 Bitcoin Halving event. The halving has caused a decrease in mining rewards, forcing companies to merge and pool resources in order to remain profitable enough to continue mining.

Bitcoin Miner Riot Platforms Plans Bitfarms Acquisition Via $950M Deal

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2024-06-24 17:44