Bitcoin miner Bitfarms said it has entered into a merger agreement to acquire Stronghold Digital Mining for $125 million in equity value, alongside $50 million in assumed debt.

In a joint Aug. 21 statement, both companies revealed that their Boards of Directors unanimously approved the transaction. The deal—subject to regulatory approval and other conditions—is expected to close in the first quarter of 2025.

As part of the acquisition, Stronghold shareholders will receive 2.52 shares of Bitfarms for each Stronghold share they hold. Following the merger, Stronghold shareholders are projected to own less than 10% of the combined entity.

Expansion potentials

The merger could boost Bitfarms’ capacity to 307 MW, advancing its goal of reaching 950 MW by the end of 2025. This development comes as Bitfarms continues to explore expanding its capacity to support high-performance computing (HPC) and AI ventures in addition to its Bitcoin mining operations.

Bitfarms CEO Ben Gagnon revealed that the merger followed three years of negotiations and stated that the deal would secure a strong future for the miner’s operations. He said:

“With this transaction, we anticipate expanding and rebalancing our energy portfolio to 950 MW, with nearly 50% located in the U.S. by the end of 2025. We also see potential for multi-year expansion up to 1.6 GW, with approximately 66% in the U.S., up from about 6% today.”

Riot Platforms’ takeover efforts

This acquisition occurs against Riot Platforms‘ hostile takeover attempt on Bitfarms.

Last week, Riot revealed that it had raised its stake in Bitfarms to 85.3 million shares. This means the third largest Bitcoin miner on Wall Street owns 18.9% of the Canadian mining company, adding a new dimension to its ongoing efforts to exert pressure on Bitfarms’ management after a failed $950 million takeover bid in April.

Since then, Riot has adopted an approach that resulted in significant boardroom changes for Bitfarms, including the sudden exit of co-founder Nicolas Bonta and the appointment of Gagnon as the firm’s CEO.

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Liam ‘Akiba’ Wright

Senior Editor at CryptoSlate

Also known as “Akiba,” Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.

Bitfarms has introduced a new shareholder rights plan — a so-called poison pill strategy — to thwart Riot Platforms’ takeover attempt, according to a July 24 statement.

The miner intends to issue new shares to dilute stakes if any entity, including Riot Platforms, acquires over 20% of its shares within the next six months. The move still requires shareholder ratification and approval from the Toronto Stock Exchange.

The firm’s board of directors unanimously approved the plan on July 24, after the Ontario Capital Markets Tribunal ordered the firm to end its initial poison pill strategy, which was implemented in June.

In June, Bitfarms adopted a poison pill strategy that would lead to the issuance of new shares if an entity acquired more than 15% of its shares.

However, Riot — which has purchased 14.9% of Bitfarms’ shares — challenged the poison pill plan at the Ontario tribunal and won a ruling in its favor.

Riot CEO Jason Les welcomed the decision, saying:

“The adoption of the off-market Poison Pill is yet another example of the broken corporate governance that plagues Bitfarms and of the ongoing attempts by the Bitfarms directors to entrench themselves. We appreciate that the Tribunal acted quickly and decisively to remove the Poison Pill.”

Riot has also called a shareholder meeting to remove Bitfarms’ founder from the board.

Shareholders protection

According to Bitfarms, the new shareholder rights plan aims to ensure fair treatment of shareholders in any future acquisition attempts. The firm added that the plan also protects against “creeping bids” — a situation where an entity accumulates a significant stake in its shares without a formal takeover bid.

Bitfarms further emphasized that the new plan is not a reaction to any specific acquisition proposal but seeks to ensure fair and equal treatment for all shareholders.

The development marks the latest in the ongoing takeover drama between Riot and Bitfarms. In May, Bitfarms rejected Riot’s $950 million acquisition bid and has since bolstered its board with the appointment of Fanny Philip and the elevation of Ben Gagnon to the CEO position.

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Bitcoin miner Bitfarms will hold a shareholder vote in October regarding Riot Platform’s takeover bid, according to a July 12 statement.

The miner stated that its shareholders of record as of Sept. 26, 2024, will be able to vote at the special meeting it convened at Riot’s behest.

Takeover bid

This marks the latest development in the protracted takeover battle between Riot and Bitfarms.

In April, Riot attempted to acquire Bitfarms for approximately $950 million. However, Bitfarms rejected the unsolicited offer and said it significantly undervalued the firm.

Since then, Riot has stepped up efforts, creating a dedicated website to educate Bitfarms’ shareholders and calling for a special meeting that will restructure the rival miner board by removing Chairman Nicolas Bonta and Director Andrés Finkielsztain.

Riot claimed these moves are necessary as the current board prioritizes the directors’ interests over those of shareholders.

Bitfarms, however, argued that Riot’s meeting request is part of its efforts to “opportunistically acquire” it after its botched $950 million offering in April. The miner stated that Riot’s request would disrupt its strategic alternatives review process and evaluation opportunities to maximize shareholder value.

Furthermore, Bitfarms pointed out that Riot had requested the shareholding record date be set after a hearing with the Ontario Securities Commission on July 22 and 23. It added that Riot made this request to nullify its shareholder rights plan and increase its holdings in the rival company. Riot is Bitfarms’ largest shareholder, holding a 14.9% stake in the miner.

Despite this, Bitfarms proceeded with its decision after a special committee of independent board directors, with financial and legal advisors, decided on the meeting and record date.

Moreover, Bitfarms urged Riot to engage it constructively to avoid depleting its limited cash resources and protect stakeholders’ interests.

Bitfarms recently appointed Ben Gagnon as CEO and Fanny Philip as an independent board member.

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Bitcoin miner Riot Platforms’ effort to take over rival Bitfarms has taken a new turn with recent developments in both companies.

Dedicated website

On July 8, Riot launched a dedicated website, “ABetterBitfarms,” to educate Bitfarms shareholders on why the rival firm’s board should be reconstituted.

CryptoSlate’s visit to the new website was greeted by a bold message stating:

“It’s Time To Fix Bitfarms’ Broken Corporate Governance. New, independent perspectives are needed on the Bitfarms Board to evaluate the best path forward for shareholders.”

The site urges Bitfarms stakeholders to anonymously share their views on the company’s operations and encourages shareholders to register and follow the website.

The move adds to the ongoing conflict between the two BTC miners. Riot first tried to acquire Bitfarms in April for about $950 million, but Bitfarms rejected the offer because it undervalued the company.

In June, Riot called for a special meeting of Bitfarms shareholders to restructure Bitfarms’ board. The miner wants to remove Chairman and Interim CEO Nicolas Bonta and director Andrés Finkielsztain, claiming the current board prioritizes the directors’ interests over those of shareholders.

Meanwhile, Riot has steadily purchased Bitfarms stock, becoming its largest shareholder with a 14.9% stake.

New CEO

On the other hand, Bitfarms continues to resist Riot’s takeover and has appointed Ben Gagnon, the former Chief Mining Officer, as its Chief Executive Officer.

Gagnon started at the firm as its Director of Business Development in 2019 and oversaw its mining strategy and operations, including growth strategies, mining economics, miner portfolio management, and evaluation and integration of new technologies.

Gagnon stated that the firm would focus on HPC (high-performance computing) for AI (artificial intelligence) opportunities under his stewardship and prepare strategies for the 2028 halving event.

Meanwhile, Gagnon is the second major executive hire for the firm in the last two weeks. Bitfarms also appointed Fanny Philip as an independent board member, increasing the board to five directors, four of whom are independent.

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Bitcoin miner Bitfarms reported an increase in Bitcoin production for June following an overall capacity upgrade.

According to its latest monthly production report, Bitfarms’s BTC production rose 21% month-on-month to 189 BTC in June, up from the 156 BTC it produced in May.

The miner stated that its production was impacted by the curtailment in Argentina and the downtime associated with upgrading its miners in Quebec. However, this was partially offset by a 0.8% decrease in network difficulty compared to May.

Meanwhile, the company sold 71% of the 189 BTC it produced, netting $8.8 million as part of its regular Treasury management process. Despite this, Bitfarms’ Treasury holds 905 BTC, valued at $55.2 million, with 1,557 BTC produced year-to-date.

Hashrate growth

The company revealed that it enhanced hashrate by 39% to 10.4 EH/s as of the end of the month. Ben Gagnon, Bitfarms’ Chief Mining Officer, said the firm had upgraded its factories to expand hashrate and improve energy efficiency.

Consequently, the miner increased its installed hashrate to 11.4 EH/s, with 10 EH/s operational. The miner also enhanced its energy efficiency to 25 w/TH, achieving a 7.4% month-on-month and 36% year-on-year growth.

Further, he reported that the company replaced 39,000 miners with new ones in June. Gagnon stated:

“We continue to make progress on our fleet upgrades and new facility constructions, having installed over 39,000 new miners and deracked over 39,000 old miners so far this year.”

Additionally, Bitfarms highlighted its strategic US expansion deal, which saw it secure a 120 MW site for High Performance Computing (HPC) and Artificial Intelligence (AI) in Sharon, Pennsylvania.

Takeover attempt continues

The takeover battle between Bitfarms and its competitor, Riot Platforms, continued to evolve in June.

Riot, which holds about 15% of Bitfarms, had called for a special shareholder meeting where it wanted to nominate three independent directors to Bitfarms’ board as part of its takeover strategy.

In response, Bitfarms named Fanny Philip as an independent board member, revealing that this appointment increased its board to five directors, four of whom are independent.

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Bitcoin miner Bitfarms is set to expand its operations in the US by leasing a site in Sharon, Pennsylvania, and deploying miners that can output 600 PH/s of hashrate.

In a June 13 statement, the firm said the site’s initial capacity will be 12 megawatts, with plans to expand to 120 MW by 2025. Bitfarms expects to bring the first 12 MW online before the end of this year, with the full capacity operational by the second half of 2025.

The project will leverage the Pennsylvania-New Jersey-Maryland Interconnection (PJM) energy market, where energy supply is abundant and renewable sources are increasingly prioritized. This provides Bitfarms with flexible energy opportunities, potentially lowering electricity costs and diversifying revenue streams.

Funding details

Bitfarms said the setup will be funded by issuing 1,532,745 common shares. The agreement includes a five-year lease for an 11,200-square-foot warehouse, with options to renew for up to 17 years or to purchase during the lease term.

Bitfarms’ Interim CEO Nicolas Bonta highlighted the significance of this expansion for the firm’s capacity and market position. He noted that the US expansion would boost Bitfarms’ 2025 power capacity to 648 MW, a 170% increase from its current capacity and a 47% rise from its projected year-end 2024 capacity.

Bonta added:

“With the site’s ability to support 8 EH/s, alongside our recent acquisition of an additional 100 MW in Paraguay, we project 2025 guidance of over 35 EH/s. As additional opportunities in our pipeline come to fruition, we will update both our contracted power capacity and our 2025 EH/s target.”

Bitfarms chief mining officer Ben Gagnon said the expansion will allow the firm to potentially earn additional revenue by participating in PJM’s demand response programs and providing reliable services to the grid.

Hostile takeover

Bitfarms’ expansion moves come as rival Riot Platforms is planning a “hostile takeover” of its operations.

In a June 12 statement, Bitfarms stated that Riot’s actions were not aligned with its shareholders and that their attacks were efforts to push their low-ball bid. It stated:

“After carefully reviewing and evaluating Riot’s proposal, the Special Committee determined that the proposal significantly undervalues Bitfarms and is not in the best interest of shareholders.”

Meanwhile, according to SEC filings, Riot has spent over $100 million to raise its stake in the Canada-based miner to 13% as of press time, from roughly 4% when the unsolicited offer was first made.

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