Bitcoin Miner Bitfarm Shares Surge as Riot Takeover Turns Hostile

Shares in Bitfarms popped 17% on Thursday after the Toronto-based Bitcoin miner unveiled plans to expand its footprint to Pennsylvania while trying to defend itself from a hostile takeover.

The company said it had entered into an agreement to develop its first large-scale mining site in the U.S., which will eventually increase its total power capacity to 648 megawatts (MW) by 2025. The new site—where construction is expected to begin immediately—could add 120 MW, Bitfarms said.

Bitfarms said it plans to lease the facility in Sharron, Pennsylvania, where computers will constantly crunch complex calculations in verifying Bitcoin transactions. Set to consume massive amounts of power, Bitfarms lauded the location for its “competitive electricity supply.”

Housed within the so-called Pennsylvania-New Jersey-Maryland Interconnection, Bitfarm’s chairman and interim CEO Nicolas Bonta said access to the U.S.’s largest wholesale electricity market “enhances [Bitfarm’s] geographical diversification.”

Bitfarms said that access to the 11,200-square-foot warehouse in the U.S. had been paid for by issuing 1.5 million in common shares. Listed on the Nasdaq stock market, Bitfarm’s stock price (NASDAQ:BITF) has increased around 140% over the past year to around $2.81, as of this writing.

Meanwhile, the company is trying to fight off Riot Platforms, which announced earlier this month that it has accumulated 12% of Bitfarm’s outstanding shares. 

Accusing Bitfarm’s board of directors of “poor corporate governance,” Riot said it intended to call a meeting of Bitfarm’s shareholders to nominate more independent and better-qualified directors.

The move was met with acrimony from Bitfarms, which subsequently said that Riot’s proposal “significantly undervalues Bitfarms and is not in the best interest of shareholders.” The conclusion was reached by a special committee of independent directors, Bitfarms stressed.

“Attacking Bitfarms’ governance is not only hypocritical, but it is a thinly veiled ploy to achieve Riot’s own self-serving agenda and attempt to acquire Bitfarms at a discounted price,” it continued. “Riot has not acted in good faith.”

Riot accused Bitfarms of poor governance again as it derided a so-called poison pill, in which Riot would be precluded, purportedly, from owning 15% of Bitfarm’s common shares without making a “formal take-over bid” to buy all of them in the Toronto-based Bitcoin miner.

Poison pills are a common defense tactic in the business world, where a company enacts measures to make its shares less attractive to purchase and discourage potential acquirers.

“Instead of engaging with us privately and in good faith, Bitfarms has responded by implementing an off-market poison pill,” Riot CEO Jason Les said in a statement. “We will continue to push to address the serious corporate governance issues at Bitfarms.”

Edited by Ryan Ozawa.