Bitcoin Miner Riot Withdraws Bid for Bitfarms, Pushes for Board Seats

Bitcoin miner Riot Platforms has pulled a $2. 30 per share bid for Bitfarms (NASDAQ: BITF), instead, wants to obtain three board seats to continue its process of buying the bitcoin mining company.

Earlier, Riot had offered $950 million for the acquisition, which was rejected by Bitfarms and thus Riot sought board changes to continue with the talks.

Bitcoin Miner Riot Aims for Board Changes

Riot Platforms said on Monday that is has pulled out from the acquisition process, instead, the company is now aiming to change the board of directors of Bitfarms. Riot Investment Trust, which owns almost 15% of Bitfarms, said such a decision is impossible as the current board of directors’ governance blocks constructive discussion. 

Thus, Riot’s statement stressed that boardroom changes are necessary in order to have a serious talk about the possibility of a merger.

Riot has nominated three candidates for the Bitfarms board: John Delaney, former mayor of Jacksonville, Florida; Amy Freedman, former CEO of Kingsdale Advisors; and Ralph Goehring, former CFO in the energy sector. These nominations are for increasing the independence and corporate governance on the board of directors of Bitfarms.

Riot Requisitions Special Meeting

Riot has called for a shareholder’s meeting at Bitfarms to discuss the governance matters. This meeting will also bring the vote to oust Bitfarms Chairman and Interim CEO Nicolas Bonta and director Andrés Finkielsztain. Post this announcement, the Bitfarms stock price declined by 5% to $2.94.

Riot alleges that these persons and any director appointed after Emiliano Grodzki’s recent departure to the Company are handling the poor governance and the failure to unlock the value of Bitfarms.

Concurrently, Riot has proposed the removal of these directors and the appointment of its own to regain shareholder confidence and bring new ideas to the table in regards to the possible merger.

Previous Acquisition Efforts and Poison Pill Defense

The effort made by Riot in trying to acquire Bitfarms has seen a lot of strategic steps and counter steps. Riot had earlier in June increased its holding in Bitfarms to 13.1% by acquiring six million shares at a cost of more than $111 million. This happened at a time when there was leadership changes at Bitfarms where the CEO Geoffrey Morphy had resigned from his position and Nicolas Bonta had been appointed as the acting CEO.

In response, Bitfarms adopted a shareholder rights plan, also known as a ‘poison pill,’ which would deny any person or entity from purchasing more than 15% of the company without the approval of the board of directors. Riot’s CEO Jason Les opposed this plan saying that this plan does not meet the 20% standard commonly observed in such cases and is legally questionable.

The acquisition of Bitfarms by Riot is part of a larger trend in the Bitcoin mining industry, which is being shaped by changes in the economic environment after the 2024 Bitcoin Halving event. This event has led to a decline in mining rewards and as such companies are joining forces and merging to ensure they are profitable enough to mine.

Read Also: Bitcoin Miner Riot Platforms Plans Bitfarms Acquisition Via $950M Deal