Bitcoin miner Riot Platforms ramps up pursuit of Bitfarms
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Two publicly traded bitcoin mining operators, Riot Platforms and Bitfarms, have been locked in a battle for the better part of the year, and it appears to be escalating.
Why it matters: Bitcoin miners are strategizing post-halving — some are shifting focus to hosting AI data centers, expanding with the help of strategic investments, and others are looking to get bigger by merger or acquisition.
Behind the scenes: What started as a friendly proposal to combine forces has turned into something of an activist campaign, with Riot launching a website called A Better Bitfarms, after amassing a nearly 15% stake in the rival bitcoin miner.
- "It's time to fix Bitfarms' broken corporate governance," the website reads and proposed three directors for Bitfarms' board.
- It also said Bitfarms "botched its CEO succession plan" and that the company has had five chiefs over five years.
- The site's launch coincided with Bitfarms naming a new CEO, an expected transition after internal drama. (Former chief Geoffrey Morphy was terminated after he sued the company for $27 million.)
💠Our thought bubble: Riot has not said anything about investor activism as a business strategy, but it sure looks like it.
Catch up quick: Riot has been giving Bitfarms the business after its merger proposal in April was rebuffed.
- Riot executive chairman Benjamin Yi and CEO Jason Les, in the letter, said the proposal was its "highest strategic priority."
- Bitfarms said it rejected the offer because it "significantly undervalued" the company; Riot is saying that Bitfarms rejected the offer without "substantive dialogue."
The other side: Bitfarms adopted a poison pill to dilute its stock — a method used to stave off a takeover.
- The trigger is set at 15%; Riot's stake recently was 14.9%.
- Riot in late June said it was seeking a cease-trade on the poison pill from Canadian securities regulators.
The big picture: This is all in the name of "maximizing value" for Bitfarms shareholders, per Riot's statements.
- When Axios asked whether Riot was pursuing an activist strategy, and how that would raise shareholder value for Riot's investors, the company declined to comment.
- Bitfarms' new CEO Ben Gagnon, hired internally, declined to comment on ongoing legal matters but emphasized its intent to build internally.
"When M&A becomes really attractive for us," he told Axios today, "is when it's going to have either a very strategic or synergistic component."
What we're watching: How it shakes out. Plus, their stock prices.
