Colorado-based cryptocurrency mining company Riot Platforms has successfully acquired a 12% stake in its rival Bitfarms, despite facing pressure from Kerrisdale Capital. In a press release on June 5th, Riot Platforms announced that it had purchased 1,460,278 common shares of Bitfarms, making it the beneficial owner of approximately 12% of the company. This acquisition, which cost Riot Platforms over $3.5 million, was made at a price of $2.45 per share.
Following the purchase, Riot Platforms revealed its plans to convene a special meeting of Bitfarms’ shareholders. At this meeting, Riot Platforms intends to nominate several well-qualified and independent directors to the Bitfarms board, expressing concerns about the board’s past performance in corporate governance.
This strategic move by Riot Platforms comes amidst pressure from Kerrisdale Capital, which recently disclosed a short position in Riot Platforms due to concerns about its equipment sourced from China and operational issues. This caused Riot Platforms’ shares to decline by 9% to $8.84. However, following the announcement of the additional Bitfarms share purchase, Riot Platforms’ share price rebounded to $9.65, according to data from Google Finance.
In late May, Riot Platforms made a $950 million acquisition bid for Bitfarms, alleging that the founders of Bitfarms were not acting in the best interests of all shareholders. Despite submitting the proposal privately in late April, Bitfarms rejected it without engaging in substantive discussions. In response, Bitfarms stated that Riot Platforms’ offer undervalued its growth potential and revealed that a special committee had requested customary confidentiality and non-solicitation protections from Riot Platforms, which were not responded to.
In other news, a report showed that Riot Platforms’ Bitcoin mining output surged by 19% in 2023, indicating the company’s continued growth and success in the cryptocurrency mining industry.