Bitcoin miner Bitfarms has initiated a "poison pill" strategy to fend off a potential hostile takeover from its competitor, Riot Platforms.

Under Bitfarms' plan, if an entity accumulates more than 15% of Bitfarms' stake after June 20 and up to Sept. 10, the company would issue fresh shares, thereby diluting the entity's stake. Following Sept. 10, the threshold would be relaxed to 20% if any takeover attempt meets certain conditions.

Bitfarms asserts that the implementation of this plan, approved by the board of directors, is aimed at safeguarding the integrity of the previously announced strategic alternatives review process and is deemed to be in the best interests of shareholders.

A shareholder rights plan, commonly referred to as a "poison pill," serves as a defense mechanism against unsolicited takeovers by making the company less attractive or by diluting the ownership of potential acquirers.

Bitfarms had rebuffed a nearly $1 billion acquisition proposal from Riot Platforms in April, citing undervaluation. Riot had proposed acquiring Bitfarms' outstanding shares at $2.30 each, representing a 24% premium over the one-month weighted average per share.

Despite Bitfarms' resistance, Riot proceeded to acquire a 9.25% stake in Bitfarms on May 28, subsequently increasing its stake to approximately 12% by purchasing an additional 1.5 million shares on June 5. Riot maintains its intention to convene a special meeting of Bitfarms' shareholders to appoint new, independent directors to the board.

In a related development, Bitfarms parted ways with former CEO Geoffrey Morphy on May 13, following his filing of a $27 million lawsuit against the company for alleged breach of contract, wrongful dismissal, and aggravated and punitive damages.

Meanwhile, amid the backdrop of Bitcoin miners releasing production updates for May, Bitfarms reported a 42% decrease in Bitcoin earnings compared to the previous month, amounting to 156 BTC. However, its total BTC holdings in treasury surged to 850 BTC, valued at $57.2 million based on a BTC price of $67,300 on May 31.

Bitfarms' Nasdaq-traded stock witnessed a 1.6% decline at the time of publication, according to Yahoo Finance, with its share price down 17% year-to-date.