Crypto Mining

Bitfarms seeks to block a hostile takeover of Riot Platform with a ‘poison pill’ approach.

Bitcoin miner Bitfarms is adopting a “poison pill” to fend off a possible acquisition by its peer and rival Riot platform.

According to Reuters, “Under Bitfarm’s plan, if any company accumulates more than 15% of Bitfarms’ stake after June 20 through September 10, the company will issue new shares to dilute that company’s stake. ” said Reuters. “After September 10, the threshold will be relaxed to 20% if takeover attempts meet certain conditions.”

Bitfarms said the plan, approved by its board of directors, “is being adopted to preserve the integrity of the previously announced strategic alternatives review process and is in the best interests of shareholders.”

Shareholder rights plans, also known as “poison pills,” are a company’s defense against unwanted acquisitions and are attempts to make the company less desirable or to dilute the acquirer’s ownership of the acquisition target.

Bitfarms rejected Last April, it received a nearly $1 billion acquisition offer from Riot Platforms. Riot wanted to purchase Bitfarms’ outstanding shares for $2.30 per share, a 24% premium to the one-month weighted average per share. Bitfarms said the deal undervalued the company.

On May 28, Riot purchased a 9.25% stake in Bitfarms and became the company’s largest shareholder. Riot purchased an additional 1.5 million shares on June 5, increasing its stake to about 12%. Riot plans to call a special meeting of Bitfarms shareholders to add new independent directors to the Bitfarms board.

On May 13, Bitfarms fired former CEO Geoffrey Morphy, who filed a $27 million lawsuit against the company alleging breach of contract, wrongful termination, and aggravated and punitive damages. reported.

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Bitcoin miners have been releasing production updates for May, the first month since the latest Bitcoin halving event. To make up for lost revenue, some are making significant moves through strategic trading and diversification.

Bitfarms said it acquired 156 BTC in May, down 42% from the previous month and down 66% from the previous year. Bitfarm’s total BTC holdings in treasury increased to 850 BTC, equivalent to $57.2 million, based on the BTC price of $67,300 on May 31.

Bitfarms’ Nasdaq-traded shares were down 1.6% at the time of the announcement, according to Yahoo Finance. The stock price has fallen 17% this year.

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© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.

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