Riot Platforms Pursues Acquisition of Competitor Bitcoin Miner Bitfarms

Riot Platforms Inc., a leading crypto mining company, has announced its intention to acquire Bitfarms Ltd., another significant player in the Bitcoin mining industry.

Riot has already acquired a 9.25% stake in Bitfarms and plans to make a public takeover offer despite the company’s board’s recent rejection.

Global Bitcoin Mining Giant

Riot has proposed an acquisition price of $2.30 per share in cash and stock, valuing Bitfarms at approximately $950 million in equity. Riot’s Executive Chairman, Benjamin Yi, emphasized the strategic importance of this merger, stating, “A combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with geographically diversified operations well-positioned for long-term growth.”

According to Riot, the proposed deal will create the world’s largest Bitcoin miner, with a combined power capacity of 1 gigawatt (GW) and a mining capacity of 19.6 exahashes per second (EH/s). By the end of the year, the capacity is projected to reach 1.5 GW and 52 EH/s.

This deal would also offer strategic and financial benefits, including enhanced growth potential and better access to equity markets. The new entity would operate 15 facilities across the US, Canada, Paraguay, and Argentina.

Riot’s strong financial standing, with minimal debt, over $700 million in cash, and 8,872 Bitcoin, is a key factor in the proposed acquisition. Riot expects this will support Bitfarms’ growth and offer better access to equity markets.

Riot submitted its offer to Bitfarms’ board on April 22, but the latter turned it down without engaging in “substantive dialogue.” According to the terms, Bitfarms shareholders would hold approximately 17% of the merged company.

Riot also intends to call for a special shareholder meeting to discuss the appointment of new independent directors following Bitfarms’ annual meeting on May 31.

Consolidation Pressure Post-Halving

The proposed acquisition comes at a critical time for the Bitcoin mining industry, which is experiencing rapid consolidation following the halving. The event, which halves the rewards for mining Bitcoin, poses revenue challenges for miners and has caused larger companies to seek mergers and acquisitions to enhance their competitive edge.

While larger miners like Riot have thrived post-halving with substantial cash reserves, smaller miners struggle due to limited negotiating power and capital access. For example, Stronghold Digital Mining Inc. is exploring strategic options, including a potential sale.

Riot operates North America’s largest Bitcoin mining facility in Texas, with a 700 MW capacity and plans for a new 1 GW site. Despite powering 200,000 Texas homes, mining operations face risks from Texas’ extreme weather and rising energy prices. Meanwhile, Bitfarms has been expanding its operations globally, particularly in South America, where electricity costs are lower.