Riot Abandons Bitfarms Takeover: What’s Next?

Bitcoin mining giant Riot has announced its decision to abandon a months-long hostile takeover attempt of the Canadian mining firm Bitfarms—at least for now.

Facing staunch opposition from Bitfarms and the implementation of a “poison pill” defense strategy by Bitfarms’ shareholders, Riot has decided to withdraw its bid to acquire Bitfarms at $2.30 per share. Instead, the American mining titan will now focus on restructuring Bitfarms’ leadership, aiming to install new directors more open to a potential deal, or as Riot diplomatically phrased it, directors with “fresh perspectives.”

In a statement today, Riot emphasized its belief in the potential synergy between the two firms: “Riot continues to believe that a combination of Bitfarms and Riot will create the premier and largest publicly listed Bitcoin miner globally. However, it is clear that engaging with the incumbent Bitfarms board on a potential combination is just not possible.”

Currently holding 14.9% of Bitfarms’ common stock, Riot is the largest shareholder of Bitfarms. Earlier this year, Riot approached Bitfarms with an acquisition offer which was swiftly rejected as a lowball bid. In response, Riot adopted a more aggressive stance, purchasing additional shares to amass a 9.25% stake and publicly declaring its intent to acquire Bitfarms by any means necessary.

The situation escalated in the ensuing weeks. Riot’s continued stock accumulation coincided with Bitfarms’ announcement of its first-ever expansion into the United States and the dismissal of Bitfarms’ CEO, Geoffrey Morphy, who subsequently filed a $27 million lawsuit against Bitfarms for breach of contract.

Amidst these developments, Riot portrayed Bitfarms’ leadership as chaotic and mismanaged. “Riot is confident it is not alone in believing that Bitfarms’ corporate governance is broken, and that the status quo cannot be allowed to continue,” Riot stated today.

Riot has called for a special shareholder meeting to vote on replacing Bitfarms’ current board with three alternatives: John Delaney, the former mayor of Jacksonville; Amy Freedman, a former investment banker and corporate advisor; and Ralph Goehring, an energy industry executive.

Following the announcement, Bitfarms’ stock fell nearly 9% to $2.68, while Riot’s stock dropped almost 4% to $9.22.