Riot Blockchain buys 12 share in Bitfarms a Bitcoin mining company

Riot Platforms, a Colorado-based cryptocurrency mining company, has made a strategic move by acquiring a 12% stake in its rival Bitfarms despite facing pressure from Kerrisdale Capital.

In a press release issued on Jun. 5, Riot Platforms announced that it had purchased 1,460,278 common shares of Bitfarms, making it the beneficial owner of approximately 12% of the company. The acquisition, which was made at $2.45 per share, cost Riot Platforms over $3.5 million.

Following the acquisition, Riot Platforms expressed its intention to convene a special meeting of Bitfarms’ shareholders. The company 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 comes at a time when Kerrisdale Capital has been shorting Riot Platforms, citing concerns about the company’s equipment sourced from China and operational issues. This caused Riot Platforms’ shares to drop by as much as 9% to $8.84. However, following the announcement of the additional Bitfarms share purchase, Riot Platforms’ 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. The proposal, which was initially submitted privately in late April, was reportedly rejected by the Bitfarms board without meaningful engagement.

In response, Bitfarms stated that Riot Platforms’ offer “significantly undervalues” its growth prospects. 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 revealed that Riot Platforms’ Bitcoin mining output had surged by 19% in 2023.