Riot Platforms has proposed acquiring Bitfarms at $2.30 per share, aiming to establish the world’s largest publicly listed Bitcoin miner, offering significant value to shareholders. Riot has already acquired a 9.25% stake in Bitfarms, becoming its largest shareholder, and plans to convene a special meeting of Bitfarms’ shareholders to appoint new independent directors to its board.

The proposal represents 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. It comprises cash and Riot common stock, potentially allowing Bitfarms’ shareholders to own approximately 17% of the combined company. Although the proposal was privately delivered on April 22, the Bitfarms Board rejected it without substantive dialogue.

Riot argues that merging the companies would yield significant strategic and financial advantages, creating a vertically integrated Bitcoin mining firm with approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity, expanding to 1.5 GW and 52 EH/s by year-end. This scale would establish the combined entity as the world’s largest Bitcoin mining company.

The merger would also enhance geographic diversification, with 15 facilities spread across the United States, Canada, Paraguay, and Argentina, providing up to 2.2 GW of power capacity upon full development. Riot’s strong financial position, boasting over $700 million in cash and minimal corporate debt, would support Bitfarms’ growth strategies and facilitate access to public equity markets.

Benjamin Yi, Executive Chairman of Riot, underscored the strategic alignment and growth prospects, expressing disappointment at Bitfarms’ swift rejection of the proposal. CEO Jason Les voiced concerns about Bitfarms’ governance, citing the sudden CEO termination and related allegations as troubling indicators.

“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. The abrupt termination of the Bitfarms CEO without a transition plan in place[…] raise serious governance questions.”

The proposal, unanimously approved by Riot’s Board of Directors, is non-binding and 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. Riot remains committed to pursuing this acquisition, aiming to establish a leading Bitcoin mining company with enhanced operational and financial capabilities.