Colorado-headquartered crypto mining company, Riot Platforms, has acquired a 12% stake in its rival Bitfarms, despite facing shorting pressure from Kerrisdale Capital. According to a press release dated June 5, Riot Platforms purchased 1,460,278 common shares of Bitfarms at $2.45 per share, totaling over $3.5 million. This acquisition makes Riot Platforms a significant shareholder in Bitfarms.
Riot Platforms’ Strategic Moves
Following this acquisition, Riot Platforms announced its intention to call a special meeting of Bitfarms’ shareholders. During this meeting, Riot plans to nominate several well-qualified and independent directors to the Bitfarms board. Riot expressed “serious concerns regarding the board’s track record of poor corporate governance” as the motivation behind this move.
Market Reactions and Kerrisdale Capital’s Short Position
This acquisition comes amid shorting pressure from Kerrisdale Capital, which recently disclosed a short position in Riot Platforms. Kerrisdale cited issues with Riot’s equipment sourced from China and operational concerns, leading to a 9% drop in Riot’s shares to $8.84. However, Riot’s share price rebounded to $9.65 following the announcement of its additional Bitfarms share purchase, according to Google Finance data.
Previous Acquisition Bid and Bitfarms’ Response
In late May, Riot Platforms made a $950 million acquisition bid for Bitfarms, alleging that the Bitfarms founders were not acting in the best interests of all shareholders. Riot claimed that its proposal, initially submitted privately in late April, was rejected by the Bitfarms board without substantive engagement.
In response, Bitfarms stated that Riot’s offer “significantly undervalues” its growth prospects. The company added that a special committee had requested “customary confidentiality and non-solicitation protections,” to which Riot did not respond.
Conclusion
Riot Platforms’ acquisition of a 12% stake in Bitfarms marks a significant development in the competitive landscape of crypto mining companies. Despite facing shorting pressure and operational concerns, Riot Platforms continues to assert its strategic interests in Bitfarms, aiming to influence the company’s governance and direction. The unfolding dynamics between these two firms will be closely watched by industry stakeholders and investors.
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