Riot Platforms recently announced a proposal to acquire Bitfarms for $2.30 per share, with the aim of creating the world's largest publicly listed Bitcoin miner. Despite already acquiring a 9.25% stake in Bitfarms and becoming its largest shareholder, the proposal was rejected by the Bitfarms Board without any meaningful discussion. This acquisition would have brought significant value to shareholders, and Riot's CEO has expressed disappointment and concern over Bitfarms' governance.

The proposal represented a 24% premium to Bitfarms' one-month volume-weighted average share price as of May 24, 2024, and a 20% premium to its share price on April 19, 2024. The consideration consisted of cash and Riot common stock, potentially allowing Bitfarms' shareholders to own approximately 17% of the combined company. Riot argues that combining the companies would create significant strategic and financial benefits, including a vertically integrated Bitcoin mining company with substantial power capacity and self-mining capacity.

Riot's robust financial profile, including over $700 million in cash and minimal corporate debt, would support Bitfarms' growth plans and improve access to public equity markets. Benjamin Yi, Executive Chairman of Riot, emphasized the strategic fit and growth potential while expressing disappointment at Bitfarms' swift rejection of the proposal. CEO Jason Les raised concerns about Bitfarms' governance, citing the abrupt termination of its CEO and related allegations as troubling signs.

The proposal was unanimously approved by Riot's Board of Directors and is non-binding, subject to customary conditions. Riot's financial advisor is Citi, and its legal advisors are Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Davies Ward Phillips & Vineberg LLP. Despite the rejection, Riot remains committed to pursuing this acquisition, aiming to create a leading Bitcoin mining company with enhanced operational and financial capabilities.

The acquisition would have brought significant benefits to both companies, including enhanced geographic diversification, increased power capacity, and improved access to public equity markets. Riot's vertically integrated Bitcoin mining company would have had substantial power capacity and self-mining capacity, positioning it as the largest Bitcoin mining company globally. The combination would have also enhanced geographic diversification, with 15 facilities across the United States, Canada, Paraguay, and Argentina, offering up to 2.2 GW of power capacity when fully developed.

Riot's CEO has expressed concerns over Bitfarms' governance, citing the abrupt termination of its CEO and related allegations as troubling signs. The rejection of the proposal without any meaningful discussion has raised serious governance questions, and Riot remains committed to pursuing this acquisition to create a leading Bitcoin mining company with enhanced operational and financial capabilities. The acquisition would have brought significant value to shareholders, and Riot's CEO has expressed disappointment and concern over Bitfarms' governance. The proposal was unanimously approved by Riot's Board of Directors and is non-binding, subject to customary conditions.