Riot Platforms Seeks to Take Over Bitfarms, Investor Interest Increases
JAKARTA - Riot Platforms' ambitious attempt to take over Bitcoin mining company Bitfarms continues to attract investor attention and shake the crypto market. The Bitfarms committee tasked with determining the best option for the company is currently considering this "hostile" offer.
The Bitcoin halving event in April, which reduced the mining reward per block from 6.25 BTC to 3.125 BTC, created a conducive environment for mergers and acquisitions. Especially for companies that have large cash reserves and face increasing challenges, such as those experienced by Bitfarms and Riot Platforms.
Riot Platforms, which currently owns a 10% stake in Bitfarms, has made an offer to buy the remaining shares of the company for USD 2.30 per share. This offer represents 24% of Bitfarms' average share price for one month on May 24, according to a news release from Riot on Tuesday.
However, Bitfarms' independent director committee rejected the offer, stating that it significantly undervalues the company's value and growth prospects.
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Strong Position of Bitfarms to Fight
Reported from Blockworks, Peter Stoneberg, managing director at Architect Partners, stated that although “hostile bids” are usually less successful in the technology sector because the value of technology companies lies in their human resources, the situation is different for crypto mining. Riot's offer comes as the company searches for a permanent CEO, highlighting that the acquisition will be made even without strong leadership.
The offer would create one of the world’s largest Bitcoin mining companies. The combined company would have 1 gigawatt of power capacity and a mining capacity of 19.6 exahashes per second. The two miners would have 15 facilities in the United States, Canada, Paraguay and Argentina, with a total capacity of up to 2.2 GW when fully developed.
Riot’s Move
Riot plans to hold a special meeting of Bitfarms shareholders after Bitfarms’ annual meeting on Friday. The goal is to add “new qualified and independent directors” to Bitfarms’ board.
However, Stoneberg added that this is likely a form of threat from Riot. Bitfarms appears to be doing everything it can to defend its position against Riot’s offer. The company has hired Moelis & Company as its financial advisor and Skadden, Arps, Slate, Meagher & Flom as its legal advisor.