According to Bloomberg, Bitcoin mining company Stronghold shareholders will receive approximately 2.5 Bitfarms shares for each share they hold. This transaction, which includes assumed debt, has not yet been made public. Representatives from both Toronto-based Bitfarms and Stronghold declined to comment on the matter.
Bitcoin miners generate cryptocurrency by solving computational puzzles, which allows them to process transactions on the Bitcoin blockchain in exchange for rewards. The mining sector is currently seeking expansion through acquisitions due to a potential revenue squeeze following an April update in the Bitcoin network software, known as the halving, which reduced daily rewards.
Stronghold, based in Kennerdell, Pennsylvania, announced in May that it was considering selling the company and exploring other alternatives. The company, which burns waste coal to generate energy for its mining operations, has a market value of around $66 million. In the second quarter, Stronghold reported a loss of $21.3 million on revenue of $19.1 million. Bitfarms, on the other hand, reported $41.5 million in revenue for the same period.
The merger is expected to enhance Bitfarms' mining capacity by providing greater access to power through Stronghold, which has its own power generation and connections to local grids. Riot, another major player in the Bitcoin mining industry with facilities in Texas, has built a nearly 19% stake in Bitfarms and made an unsolicited $950 million offer. Riot, based in Castle Rock, Colorado, reported $70 million in revenue in the second quarter.