Riot Blockchains mining division purchases 12 ownership in Bitfarms

Riot Platforms, a Colorado-based cryptocurrency mining company, has taken a bold step by acquiring a 12% stake in its rival Bitfarms, despite facing pressure from Kerrisdale Capital to short its position.

In an announcement on June 5th, Riot Platforms revealed that it had purchased 1,460,278 common shares of Bitfarms, making it the beneficial owner of approximately 12% of the company. The acquisition, valued at $2.45 per share, cost Riot Platforms over $3.5 million.

Following this purchase, Riot Platforms expressed its intention to convene a special meeting of Bitfarms’ shareholders. In 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 strategic move by Riot Platforms comes in the face of pressure from Kerrisdale Capital, which recently disclosed a short position in Riot Platforms. Kerrisdale Capital raised issues about Riot Platforms’ equipment sourced from China and operational concerns, causing Riot Platforms’ shares to plummet by 9% to $8.84. However, the share price rebounded to $9.65 after the announcement of the additional Bitfarms share purchase.

In late May, Riot Platforms made a $950 million bid to acquire Bitfarms, alleging that Bitfarms’ founders were not acting in the best interests of all shareholders. Riot Platforms claimed that its proposal, initially submitted in late April, was rejected by the Bitfarms board without meaningful discussion.

In response, Bitfarms stated that Riot Platforms’ offer significantly undervalued its growth potential. The company mentioned that a special committee had requested customary confidentiality and non-solicitation protections from Riot Platforms, to which there was no response.

In other news, a report indicated that Riot Platforms’ Bitcoin mining output had increased by 19% in 2023.