Bitcoin mining firm Bitfarms adopts "poison pill" plan to counter Riot acquisition threat, post-halving consolidation wave looms for miners
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Bitcoin mining firm Bitfarms adopts "poison pill" plan to counter Riot acquisition threat, post-halving consolidation wave looms for miners
Bitcoin mining company Bitfarms announced on June 10 that it has approved a Shareholder Rights Plan, also known as a "poison pill," to prevent acquisition by peer and competitor Riot Platforms.
Navigating Web3 tides with focused insightsBy Chloe, PANews
Bitcoin mining company Bitfarms announced on June 10 that it has approved the adoption of a Shareholder Rights Plan, commonly known as a "poison pill," to defend against a potential takeover by peer and competitor Riot Platforms. According to the statement, this equity-dilution anti-takeover measure is a defensive strategy aimed at reducing the company's attractiveness or diluting an acquirer’s ownership stake in the event of an unsolicited bid.
Bitfarms stated that the plan has been approved by its board of directors, “aimed at preventing a low-ball hostile acquisition during a critical strategic review period, thereby safeguarding the integrity of the evaluation process and the fundamental interests of shareholders.”
Under Bitfarms’ poison pill plan, if an acquiring entity (or its affiliates) accumulates more than 15% of Bitfarms shares between June 20 and September 10, the company will issue new shares to dilute the stake of that entity. After September 10, the threshold for triggering such measures will increase to 20%, provided certain conditions are met.
In other words, the rights plan sets time-varying ownership thresholds. During the key strategic assessment period, the lower threshold strengthens defenses; after the review concludes, the higher threshold allows for greater flexibility, indicating the board’s openness to consider friendly acquisition proposals. This structure aims to protect both the company and shareholder interests while leaving room for amicable mergers or acquisitions.
Riot becomes largest shareholder, seeks to add independent directors to Bitfarms' board
The key catalyst prompting Bitfarms’ adoption of the poison pill was Riot Platforms’ acquisition of a 9.25% stake in Bitfarms on May 28, making it the company’s largest shareholder. Riot then purchased an additional 1.5 million shares on June 5, increasing its ownership to approximately 12%.
Riot also indicated plans to request a special shareholder meeting to appoint independent directors to Bitfarms’ board, citing concerns over corporate governance.
Market observers speculate that Riot aims to weaken Bitfarms’ board resistance to a takeover through these moves, highlighting a clear divergence and conflict between Bitfarms’ board and Riot regarding whether an acquisition should proceed and how best to protect shareholder value.
Looking back to April 22, when Riot held a 3.61% stake in Bitfarms, it had previously submitted an acquisition proposal to purchase all outstanding shares. Riot argued that Bitfarms’ board was failing to maximize shareholder value. In response, Bitfarms formed a special committee to evaluate the offer. After careful consideration, the committee concluded that Riot’s bid significantly undervalued the company and rejected the nearly $1 billion acquisition proposal.
This rejection was quickly followed by Riot’s series of aggressive share purchases and Bitfarms’ subsequent implementation of its poison pill defense.
Was CEO dismissal the spark for the takeover battle?
However, Riot’s push to convene a shareholder meeting and add independent directors to Bitfarms’ board was largely driven by Bitfarms’ announcement on May 13 of the termination of CEO Geoffrey Morphy.
According to Riot CEO Jason Les, Bitfarms’ decision to dismiss its CEO played a role in Riot’s decision to pursue an acquisition. Les stated he believes founders Nicolas Bonta and Emiliano Grodzki, who sit on Bitfarms’ board, may not be acting in the best interests of all Bitfarms shareholders.
The abrupt firing of the CEO—without a transition plan—during a critical operational phase for Bitfarms and the broader industry raised governance concerns for Les.
Moreover, the dismissed former CEO, Geoffrey Morphy, has filed a $27 million lawsuit against Bitfarms, alleging breach of contract and wrongful termination. If these claims hold merit, they could further expose internal issues within Bitfarms’ board.
Given these factors, Les believes it is necessary to call a special shareholder meeting to allow shareholders to restructure the board, address governance shortcomings, and prioritize maximizing value for all shareholders.
Thus, Bitfarms’ decision to fire its CEO partially prompted Riot’s acquisition bid and its challenge to the current board’s competence and motives. Clearly, Riot also hopes to leverage this situation to gain broader shareholder support, drive board restructuring, and ultimately advance its takeover ambitions.
Riot isn’t alone—other miners may also pursue acquisition
A merger between Riot and Bitfarms would create one of the largest bitcoin mining companies globally. According to Riot, the combined entity would have 1 gigawatt (GW) of power capacity and 19.6 exahash per second (EH/s) of self-mining capacity.
Together, the two mining firms operate 15 mining sites across the U.S., Canada, Paraguay, and Argentina, with a total potential generating capacity of up to 2.2 GW once fully developed. Nishant Sharma, founder of BlocksBridge Consulting, noted that the two companies mined a combined 676 BTC in April, ranking just behind Marathon Digital, Core Scientific, and CleanSpark. “With increased competition post-Bitcoin halving and a tougher operating environment, the mining sector is indeed undergoing consolidation,” Sharma told Blockworks.
Moreover, Riot may not be the only company eyeing Bitfarms. Bitfarms has indicated it has received multiple expressions of interest from various parties. Joe Flynn, an analyst at Compass Point Research and Trading, noted in a recent research report that large miners such as Marathon Digital and CleanSpark could also enter the fray as potential bidders.
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