Key Points:
- Canadian tribunal terminates Bitfarms’ initial ‘poison pill’
- Bitfarms adopts a new rights plan with a 20% threshold
- Riot Platforms continues to push for board representation
The Battle for Control: Bitfarms vs. Riot Platforms
The cryptocurrency mining industry is witnessing a high-stakes corporate drama as Bitfarms, a Canadian Bitcoin mining company, finds itself locked in a struggle against rival Riot Platforms’ takeover attempts. The latest development in this ongoing saga sees Bitfarms adopting a second ‘poison pill’ strategy, immediately following the termination of its first such plan by a Canadian tribunal.
On Wednesday, Bitfarms announced the implementation of a new shareholders rights plan, commonly known as a ‘poison pill’. This defensive measure comes in response to the Ontario Capital Markets Tribunal’s decision to cease the company’s earlier poison pill, which was originally adopted to fend off a potential hostile takeover by Riot Platforms.
The New ‘Poison Pill’: Raising the Stakes
Bitfarms’ new rights plan differs from its predecessor in key aspects. The threshold for triggering the plan has been raised from 15% to 20% of the company’s common shares. This means that if any entity accumulates more than 20% of Bitfarms’ shares through “creepy” bids, the plan will be activated.
Under the new plan, if triggered, current stockholders would be allowed to purchase shares at a significant discount to the market price. This action would effectively dilute the stake of the entity attempting to gain control, making a takeover more difficult and expensive.
Bitfarms has set the duration of this new plan at six months, providing a window of protection as it navigates the ongoing situation with Riot Platforms. The company stated that the plan allows Riot to proceed with its three nominations to the Bitfarms board – John Delaney, Amy Freedman, and Ralph Goehring – and to solicit proxies for the board meeting scheduled for October.
Riot Platforms: Pressing Forward
Despite the setback of having its $950 million offer rebuffed by Bitfarms in June, Riot Platforms continues to push for influence within its rival company. Riot, which disclosed a 12% stake in Bitfarms, maintains that its offer was fair and in the best interests of Bitfarms shareholders.
Following the Canadian tribunal’s decision to terminate Bitfarms’ original poison pill, Riot CEO Jason Les stated, “This ruling from the Tribunal in favor of Riot’s application is a win for all Bitfarms shareholders.” Riot remains committed to its strategy of gaining board representation, believing that their three director nominees must be elected to the Bitfarms Board at the upcoming Special Meeting of Shareholders.
The Road Ahead: Implications for the Crypto Mining Industry
This ongoing battle between Bitfarms and Riot Platforms highlights the increasing consolidation and competition within the cryptocurrency mining sector. As the industry matures and faces challenges such as Bitcoin halving events and fluctuating cryptocurrency prices, companies are seeking ways to strengthen their positions and increase efficiency.
The outcome of this corporate struggle could have significant implications for the broader crypto mining landscape. A successful acquisition by Riot could create a more dominant player in the market, potentially leading to further consolidation. On the other hand, if Bitfarms maintains its independence, it may spur other companies to bolster their defenses against potential takeovers.
As the situation continues to unfold, all eyes will be on the upcoming Bitfarms board meeting in October. The results of this meeting, particularly regarding the election of board members, could significantly impact the future direction of both companies and potentially reshape the competitive dynamics of the cryptocurrency mining industry.