Riot Platforms has proposed acquiring Bitfarms at US$2.30 per share, aiming to form the world’s largest publicly traded Bitcoin mining entity. Riot, which currently holds a 9.25% stake in Bitfarms, plans to convene a special shareholder meeting to appoint new independent directors to Bitfarms’ board.

The offer represents a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24, 2024, and a 20% premium over its April 19, 2024, share price. It includes cash and Riot common stock, potentially allowing Bitfarms’ shareholders to own approximately 17% of the merged company. Initially presented privately on April 22, the proposal was swiftly rejected by Bitfarms’ board without substantive discussion.

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

The merger would enhance geographical diversity across 15 facilities in the United States, Canada, Paraguay, and Argentina, providing up to 2.2 GW of power capacity upon full development. Riot’s robust financial position, including over $700 million in cash and minimal corporate debt, would support Bitfarms’ growth initiatives and improve access to public equity markets.

Benjamin Yi, Riot’s Executive Chairman, highlighted the strategic alignment and growth potential while expressing disappointment at Bitfarms’ rapid dismissal of the proposal. CEO Jason Les raised governance concerns, citing the sudden CEO termination and related issues as troubling indicators.

“We are deeply concerned that Bitfarms’ founders, Nicolas Bonta and Emiliano Grodzki, may not be acting in the best interests of all shareholders. The abrupt CEO termination without a succession plan raises serious governance questions.”

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