Colorado-headquartered crypto mining company Riot Platforms has acquired ownership of a 12% stake in rival Bitfarms despite shorting pressure from Kerrisdale Capital.
Bitcoin mining company Riot Platforms said in a press release on Jun. 5 it acquired 1,460,278 common shares of Bitfarms, becoming the beneficial owner of approximately 12%. The company said the latest purchase, at $2.45 per share, cost Riot over $3.5 million in total.
Following the acquisition, Riot stated its intention to call a special meeting of Bitfarmsâ shareholders. At this meeting, Riot plans to nominate âseveral well-qualified and independent directorsâ to the Bitfarms board, citing âserious concerns regarding the boardâs track record of poor corporate governance.â
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This move comes amid shorting pressure from Kerrisdale Capital, which recently disclosed a short position in Riot, citing issues with Riotâs equipment sourced from China and operational concerns, and causing Riotâs shares to drop by as much as 9% to $8.84. However, Riotâs share price rebounded to $9.65 following the announcement of its additional Bitfarms share purchase, according to Google Finance data.
RIOT share price in USD | Source: Google
In late May, Riot announced a $950 million acquisition bid for Bitfarms, alleging that Bitfarmsâ founders werenât acting in the best interests of all shareholders. Riot claims its proposal, initially submitted privately in late April, was rejected by the Bitfarms board without substantive engagement.
Bitfarms responded by stating that Riotâs offer âsignificantly undervaluesâ its growth prospects. The company added that a special committee had requested âcustomary confidentiality and non-solicitation protectionsâ to which Riot didnât respond.
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