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Bitcoin mining giant Riot announced today that it will abandon a monthslong effort to pull off a hostile takeover of Canadian mining firm Bitfarms—at least for the moment.
Due to Bitfarms’ continued opposition to the plan, and apparently successful implementation of a so-called “poison pill” shareholder rights defense against the forced acquisition, Riot said Monday it has withdrawn its bid to acquire Bitfarms for $2.30 a share.
Instead, the American mining behemoth will now pivot its efforts to purging Bitfarms’ leadership, in an attempt to shake up the company and install directors more amenable to a potential deal—or, as Riot put it euphemistically this morning, those possessing “fresh perspectives.”
“Riot continues to believe that a combination of Bitfarms and Riot will create the premier and largest publicly listed Bitcoin miner globally,” Riot said in a statement today. “However, it is clear that engaging with the incumbent Bitfarms board on a potential combination is just not possible.”
Riot currently owns 14.9% of Bitfarms common stock, handily making it Bitfarms’ largest shareholder. In April, Riot reportedly approached Bitfarms with an acquisition offer, but was quickly rebuffed, with the latter firm dismissing the bid as an extreme lowball.
Riot then pivoted to a more aggressive approach, accumulating a 9.25% ownership stake in Bitfarms via stock purchases, and publicly announcing its plans to acquire the company by hook or by crook.
Things got messier in subsequent weeks, what with Riot buying up more Bitfarms stock, Bitfarms announcing a planned expansion into the United States for the first time ever, and Bitfarms’ dismissing its CEO, Geoffrey Morphy, after Morphy filed a $27 million lawsuit against the company claiming breach of contract.
Riot seized today on a narrative that Bitfarms’ operations have recently devolved into chaos, painting Bitfarms’ current leadership as self-serving and out of touch.
“Riot is confident it is not alone in believing that Bitfarms’ corporate governance is broken, and that the status quo cannot be allowed to continue,” Riot said today.
Riot has called for a special shareholder meeting to vote on replacing Bitfarms’ current board with three alternatives: John Delaney, the former mayor of Jacksonville; Amy Freedman, a former investment banker and corporate advisor; and Ralph Goehring, an energy industry executive.
On Monday’s news, Bitfarms stock fell nearly 9%, to $2.68 at writing. Riot is down almost 4%, to $9.22.
Representatives for Bitfarms said Monday that the firm would review Riot’s request for a shareholder meeting, but argued that it was Riot, not Bitfarms, that has been negotiating in bad faith.
“The Special Committee is disappointed that Riot declined to engage constructively and participate in the process, and instead has continued to take steps to attempt to undermine the integrity of the process and harm the interests of other Bitfarms shareholders,” Bitfarms said in a statement shared with Decrypt.
The response indicates that Bitfarms might still be open to a deal—if, of course, the price is right.
Riot did not immediately respond to Decrypt's request for comment.
Edited by Andrew Hayward
Editor's note: This story was updated after publication to include comment from Bitfarms.