Riot Blockchain secures 12 stake in Bitfarms through acquisition
Riot Platforms, a crypto mining company based in Colorado, has recently acquired a 12% stake in its rival Bitfarms despite facing pressure from Kerrisdale Capital to short its position.
In a press release on Jun. 5, Riot Platforms announced the acquisition of 1,460,278 common shares of Bitfarms, making them the beneficial owner of approximately 12% of the company. This purchase, at $2.45 per share, cost Riot Platforms over $3.5 million in total.
Following the acquisition, Riot Platforms expressed its intention to convene a special meeting of Bitfarms’ shareholders. During this meeting, Riot Platforms plans to nominate “several well-qualified and independent directors” to the Bitfarms board, citing concerns about the board’s history of poor corporate governance.
This move by Riot Platforms comes in response to pressure from Kerrisdale Capital, which recently revealed a short position in Riot Platforms due to concerns about its equipment sourced from China and operational issues. This caused Riot’s shares to initially drop by as much as 9% to $8.84. However, following the announcement of the additional Bitfarms share purchase, Riot’s share price rebounded to $9.65, according to data from Google Finance.
In late May, Riot Platforms made a $950 million acquisition bid for Bitfarms, claiming that Bitfarms’ founders were not acting in the best interests of all shareholders. Riot Platforms stated that its proposal, initially submitted privately in late April, was rejected by the Bitfarms board without meaningful discussion.
In response, Bitfarms argued that Riot Platforms’ offer “significantly undervalues” its potential for growth. The company also mentioned that a special committee had requested standard confidentiality and non-solicitation protections, to which Riot Platforms did not respond.
In other news, a report indicated that Riot Platforms’ Bitcoin mining output had increased by 19% in 2023.
