Bitfarms, a prominent Bitcoin mining company, released its monthly production data, shedding light on the significant effects of Bitcoin halving on its financial performance and raising questions about potential industry consolidation.

In its recent update, Bitfarms reported earning 156 BTC in May, a substantial 42% decline from the previous month and a 66% drop year over year. Out of the BTC earned, Bitfarms sold 136 BTC for $8.9 million, a notable decrease from $16.1 million in April, as part of its routine treasury management.

Despite the downturn in earnings, Bitfarms' total BTC held in treasury rose to 850 BTC, equating to $57.2 million based on a BTC price of $67,300 on May 31. However, the efficiency metric of 24.5 BTC per average exahash per second (EH/s) of computational power fell by 45% from the previous month, reflecting the impact of "post-halving economics" throughout May. The daily average of 5.0 BTC earned translates to approximately $340,000 per day, based on the BTC price at the end of May.

Bitcoin halvings occur roughly every four years, reducing miners' block reward by 50%. This event significantly affects miners' profitability, though they continue to earn transaction fee rewards.

Ben Gagnon, Chief Mining Officer at Bitfarms, expressed optimism despite the halving impact, stating, "Our fleet upgrade is progressing at a rapid pace. Year-to-date we have received 25,600 miners and installed 23,600 miners, with the remaining 16,200 miners en route. Together, these miners provide sufficient hashing power to achieve 12 EH/s in June."

In a notable industry development, Bitfarms rejected a near $1 billion acquisition proposal from Riot Platforms, another Bitcoin mining company. Riot's offer to buy all of Bitfarms' outstanding shares at $2.30 each, representing a 24% premium on the one-month weighted average per share, would have amounted to $950 million in total equity value. Despite the rejection, Riot acquired a 9.25% stake in Bitfarms, making it the largest shareholder in the company.

Juan Leon, Senior Crypto Research Analyst at Bitwise, commented on the potential synergy, stating, "Combining the operations of two firms would result in 52 EH/s of self-mining capacity by year-end 2024 across 15 sites globally."

Bitfarms also faced internal turmoil, with the departure of former CEO Geoffrey Morphy on May 13. Morphy has filed a $27 million lawsuit against Bitfarms for alleged breach of contract, wrongful dismissal, and aggravated and punitive damages. This legal battle, coupled with the hostile takeover attempt, adds to the company's challenges.

"The Bitfarms board is now dealing with the poorly planned ouster of the CEO and a hostile takeover," noted Leon. "Additional bids could result in a higher takeover price, benefitting shareholders."

Despite these challenges, Bitfarms' stock showed resilience, trading 4% higher at $2.33 per share, according to Yahoo Finance. However, the shares have dropped 18% year-to-date.

Founded in 2017, Bitfarms operates 12 Bitcoin mining facilities and has one under development across four countries: Argentina, Canada, Paraguay, and the United States. The company's ability to navigate post-halving economics and potential industry consolidation will be crucial for its future growth and stability.