Riot Platforms offers $950M acquisition to Bitfarms amid CEO controversy

Bitcoin miner Riot Platforms has announced an offer to buy BitFarms for a substantial share price. Riot made a proposal to the smaller Canadian competition board on April 22 and is making the proposal public after the offer was rejected.

Colorado-based Riot is already Bitfarms' largest shareholder, with a 9.25% stake. It has now offered shareholders a combination of cash and common stock at an estimated equity value of $950 million, or a 24% premium to Bitfarms' one-month volume-weighted average share price, effective May 24, 2024. Bitfarms shareholders will be about the owner. 17% of the combined company.

Riot said in a statement that the offer “offers BitFarms shareholders […] Potential to create future value by participating in a financially and commercially strong company with sound strategy led by an established and proven management team.

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Bitfarms management is in transition as it looks for a new CEO. The company announced the search in a March 25 statement, and then-CEO and President Jeffrey Murphy said: “The management team is confident that we will be successful in achieving our 2024 growth goals.” BitFarms initially intended to keep Morphine while looking for his replacement.

On May 10, Morphy sued the company for $27 million, alleging breach of contract, wrongful termination and damages. BitFarms fired him on May 13 and appointed chairman and co-founder Nicolas Bonta to replace him. Riot said:

“If true, new allegations in the lawsuit filed by BitFarms' recently terminated CEO raise serious questions about the commitment of certain directors to protecting the interests of all shareholders.”

Riot identified its co-founders Bonta and Emiliano Grodzkin as the directors in question. He said a special meeting of Bitfarms shareholders is needed after the company's May 31 annual general and special meeting to “add new, well-qualified and independent directors to the Bitfarms board.”

BitFarms shows alarming year-over-year earnings in 2023. Bitcoin (BTC) halving begins costly technical correction. Analysts expected BitFarms to do well after the halving. However, its April revenue was down 29 percent compared to last year. Riot reported a 131% increase in net revenue to $211 million in the first quarter of 2024. Since then, financial information has not been released.

According to Riot, the combined company will have the largest capacity of any publicly listed bitcoin miner, with “approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity, up to 1.5 GW of power capacity and 52 EH/s of self-mining capacity by the end of the year.”

BitFarms did not respond to Cointelegraph's request for comment at the time of publication.

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