Riot Platforms Seeks to Become World's Largest Publicly Listed Bitcoin Miner with Bitfarms Acquisition

Bitcoin mining powerhouse Riot Platforms has announced a substantial $950 million acquisition offer for its competitor, Bitfarms, alleging that Bitfarms’ founders are not acting in the best interests of their shareholders. This strategic move aims to position Riot Platforms as the largest publicly listed Bitcoin miner globally.

Riot Platforms, based in Colorado, has proposed to acquire all outstanding shares of Bitfarms (BITF) at $2.3 per share. The offer, combining cash and common stock, promises Bitfarms shareholders a significant premium and immediate cash value. If accepted, Bitfarms shareholders would own up to approximately 17% of the combined entity, which Riot claims would be financially stronger and strategically focused under its experienced management team.

“This cash and stock proposal would provide Bitfarms’ shareholders with a substantial premium and immediate cash value, as well as significant potential for future value creation through participation in a financially and commercially stronger company with a well-defined strategy, led by an established and proven management team,” stated Riot Platforms in a press release on May 28.

Riot initially presented this offer privately to Bitfarms' board in late April. However, the proposal was promptly rejected without substantial discussion, according to Riot. The situation has been further complicated by recent allegations in a $27 million lawsuit filed by Bitfarms’ former CEO, Geoffrey Morphy. The lawsuit, which includes claims of breach of contract and wrongful dismissal, raises concerns about the commitment of certain Bitfarms directors to their fiduciary duties.

“We are deeply concerned that the founders on the Bitfarms Board — Nicolas Bonta and Emiliano Grodzki — may not be acting in the best interests of all Bitfarms shareholders,” said Riot Platforms CEO Jason Les.

To address these governance issues, Riot Platforms plans to convene a special meeting with Bitfarms shareholders after May 31. The agenda includes the appointment of new, independent directors to the Bitfarms board. Following the acquisition offer, Riot acquired 10% of Bitfarms’ shares, driving BITF’s stock price up nearly 10% to $2.21, as per Google Finance data.

The conflict escalated in mid-May when Geoffrey Morphy filed a lawsuit against Bitfarms in the Superior Court of Ontario. Morphy's claims include breach of contract, wrongful dismissal, and demands for aggravated and punitive damages, following his unexpectedly announced "smooth" departure in March.

This acquisition bid and the ensuing legal and corporate governance controversies underscore the high-stakes nature of the Bitcoin mining industry and the intense competition for market dominance. Riot Platforms’ aggressive acquisition strategy highlights its ambition to consolidate the market and enhance shareholder value amidst a rapidly evolving cryptocurrency landscape.