Riot criticizes Bitfarms’ acquisition proposal, board changes

Riot Platforms has once again publicly criticized fellow bitcoin miner Bitfarms — this time questioning its latest proposed acquisition and board of directors adjustments.

In an open letter Tuesday, Riot called for Bitfarms to halt its strategic actions ahead of a shareholder meeting slated for late October.

“Specifically, the Bitfarms board should not enter into any financing transaction prior to the completion of the special meeting,” the company said in a Tuesday release. “Riot is deeply concerned that any transaction the current Bitfarms Board will pursue will be punitively dilutive to all Bitfarms’ shareholders when there are other more attractive financing options available.”  

Read more: Bitfarms sets vote date after rival Riot proposes new board members 

Riot Platforms owns roughly 19.9% of Bitfarms stock, making it the company’s largest shareholder. It tried to acquire Bitfarms via a so-called “hostile” takeover in April, calling out what it deems to be the company leadership’s “poor corporate governance practices and consistent inability to realize Bitfarms’ full potential.”

The miner’s open letter comes nearly two weeks after Bitfarms said it planned to buy Stronghold Digital Mining in a $125 million stock-for-stock transaction. Bitfarms noted it also planned to assume about $50 million of debt.  

This $175 million sum is a more than 100% premium to Stronghold’s closing share price the day before the announcement, Riot said in the letter. It added that Stronghold appeared to be mulling a sale for months, noting that “clearly no other participant in the sector was willing to pay such an inflated price.”

In a Tuesday operational update, Bitfarms noted that the acquisition would allow the company to expand to 950 megawatts by the end of 2025, with about half of that capacity based in the US.

Read more: Bitfarms makes an acquisition after shaking off Riot’s takeover try

Beyond the acquisition, Riot also criticized Bitfarms’ board of directors moves, calling them “reactive and insufficient to address Bitfarms’ broken governance.” Bitfarms appointed CEO Ben Gagnon to the board last month as company co-founder Nicolas Bonta stepped down.

Bitfarms’ board has also not shown a “willingness to work constructively with Riot” as it related to a potential combination, Riot claims.  

The letter adds: “If the Bitfarms Board insists on taking any such action to further entrench itself at the expense of shareholders, Riot will not hesitate to hold the incumbent directors personally accountable.”

A Bitfarms spokesperson did not immediately return a request for comment about some of the allegations in Riot’s open letter.

Bitfarms’ shareholder meeting is set for Oct. 29. Riot has nominated Amy Freedman and John Delaney to replace co-founder Andres Finkielsztain and Fanny Philip as board directors.   

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