Concerns Over Bitfarms Founders’ Shareholder Commitment

Riot Platforms, based in Colorado, USA, has announced a $950 million bid to acquire competitor Bitfarms. The offer involves purchasing all shares of Bitfarms at $2.3 each. This strategic move could potentially make Riot Platforms the largest publicly listed Bitcoin miner worldwide.

On May 28, Riot Platforms shared details of the acquisition proposal, which includes a combination of cash and common stock. This deal promises Bitfarms’ shareholders up to 17% ownership in the merged entity. Riot Platforms first approached Bitfarms with this proposal in late April. However, the Bitfarms board initially rejected the proposal, opting not to engage in detailed discussions with Riot.

Allegations and Legal Challenges Impact Acquisition Talks

Complications arose after Geoffrey Morphy, the former chief executive of Bitfarms, was dismissed. Following his termination, Morphy sued Bitfarms in the Superior Court of Ontario. His lawsuit claims breach of contract, wrongful dismissal, and demands both aggravated and punitive damages. These legal challenges have cast doubt on the intentions of certain Bitfarms directors, with Riot Platforms questioning their commitment to the shareholders’ best interests.

In response to the board’s initial rejection, Riot Platforms plans to call a special meeting with Bitfarms’ shareholders post-May 31. The aim is to elect new, independent, and qualified directors to the Bitfarms Board. Following the acquisition announcement, Riot Platforms bought a 10% stake in Bitfarms, which led to a near 10% increase in Bitfarms’ stock price, peaking at $2.21 as per the latest figures from Google Finance.

This acquisition, if successful, could significantly reshape the competitive landscape of Bitcoin mining by creating a new leader in the sector. Riot Platforms continues to pursue this merger, signaling a strong push towards expansion and consolidation in the industry.

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