In a decisive move to protect its autonomy, Bitcoin mining company Bitfarms has enacted a shareholder rights plan following its recent Annual General and Special Meeting. This development comes in response to an aggressive takeover attempt by Riot Platforms, a fellow Bitcoin mining enterprise.

The adoption of the shareholder rights plan, commonly known as a "poison pill," is designed to thwart Riot's hostile bid under highly restricted conditions. While it complicates Riot's efforts, it does not entirely preclude the possibility of a takeover.

The key provision of Bitfarms' new plan stipulates that if any person or group acquires 15% of Bitfarms' shares by September 20 and subsequently increases their stake to 20% without board approval, other shareholders will have the right to purchase additional common shares at a substantial discount. This mechanism is intended to dilute the bidder's share, thereby making the takeover more difficult and costly.

Despite these measures, a takeover bid can still proceed under Canadian law, though Riot's shareholding would be significantly diluted in the process. This provision aims to ensure that any hostile bid is conducted under fair and controlled circumstances, safeguarding the interests of all shareholders.

Riot Platforms, undeterred by the new plan, has expressed frustration with Bitfarms' board. Riot claims that Bitfarms rejected its April takeover proposal without meaningful discussion. Conversely, Bitfarms contends that it welcomed Riot's interest but found the offer undervalued the company’s shares. The tension escalated as Riot accused Bitfarms of undermining a proposed standstill agreement intended to facilitate orderly negotiations. Instead of participating in the standstill process, Riot continued to acquire Bitfarms shares on the open market, increasing its stake from 3.61% to 11.62% by the time of the shareholder meeting.

In a related development, Bitfarms co-founder Emiliano Grodzki failed to secure his board seat during the recent election. Riot had previously questioned whether Grodzki and fellow co-founder Nicholas Bonta were acting in the best interests of all shareholders, suggesting internal dissent and questioning the leadership’s strategic decisions.

Bitfarms’ defensive strategy reflects a broader trend among companies seeking to safeguard against hostile takeovers while ensuring that any potential acquisition aligns with the best interests of their shareholders. The unfolding scenario between Bitfarms and Riot Platforms underscores the complexities and strategic maneuvers characteristic of high-stakes corporate takeovers in the rapidly evolving cryptocurrency mining sector.

As the situation develops, the industry will closely watch how Riot responds to Bitfarms’ defensive measures and whether Bitfarms’ shareholders will ultimately support the board’s strategy to remain independent or yield to Riot’s aggressive acquisition tactics.