Riot believes strongly that Bitfarms’ recent management turnover is an indication of corporate governance problems.
Just after taking a 9.25% stake in Bitfarms Ltd, Riot Platforms Inc (NASDAQ: RIOT) is planning to go public with a takeover offer for the less capitalized Bitcoin miner. According to Bloomberg, some sources who pleaded anonymity claimed that Riot Platforms is offering to pay $2.30 per share in cash and stock for Bitfarms. This amounts to approximately $950 million in equity value.
According to market data, the shares are currently valued at 2.86 Canadian dollars, an equivalent of $2.10.
Bitcoin Halving Impacts on Miner’s Operations
Riot believes strongly that Bitfarms’ recent management turnover is an indication of corporate governance problems.
Consequently, the Bitcoin mining and digital infrastructure company also plans to call a vote to add directors to the Canadian company, per anonymous sources. The request to appoint new independent directors will be made public at the company’s annual meeting which will be held on May 31.
This seems like the latest sign of accelerated consolidation in the digital asset sector, coming on the heels of the Bitcoin halving event which took place over a month ago.
The once-every-four-years event ordinarily results in the loss of billions of dollars in revenue for miners of the digital asset. Most small Bitcoin mining firms get kicked out of the “game” during this period as they lack the negotiating power to remain, unlike larger mining organizations.
Upon the completion of the halving event and the new mining industry economics, large-scale mining companies have started seeking means to improve their market outlook. Precisely, they are in search of potential targets to bolster their operations while the smaller ones seek refuge. Barely two weeks after the halving, Bitcoin miner Stronghold Digital Mining Inc. began to weigh alternatives, including a potential sale of the company.
Riot Platforms Offers Bitfarms’ 17% of New Company
Riot Platforms happens to be one of the tough survivors of the new market outlook. In Texas, it still boasts of having North America’s largest Bitcoin mining facility with a total power capacity of 700 megawatts.
Riot’s takeover move, if successful, will birth one of the largest Bitcoin miners globally because of the combination of the company’s projected computing power growth. Similarly, it would boost the company’s Bitcoin production, inching it closer to some of the biggest mining firms like Marathon Digital Holdings Inc and CleanSpark Inc.
The bid was first submitted to Bitfarms board in April but they did not pay much attention to the offer. They particularly dismissed it without any “substantive dialogue” around a deal. Riot’s offer included giving Bitfarms shareholders about 17% of the combined company.
Bitfarms’ management is faced with some challenges that have negatively impacted operations. Geoffrey Morphy, the interim CEO of the Bitcoin mining firm was asked to step down earlier this month. This followed Morphy’s bold move to file a lawsuit against Bitfarms claiming $27 million in damages for breach of contract.
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