Recently, Bitcoin mining firms Bitfarms and Riot Platforms have reached a settlement agreement, bringing an apparent conclusion to Riot’s attempted takeover of Bitfarms.
The agreement, announced on Monday, includes several key provisions to address governance concerns and ensure a smooth path forward for both companies.
Among several interesting provisions, the settlement prevents Riot Platforms from buying more than 20% of Bitfarms’ stake without the consent of the latter’s board.
This restriction seeks to avoid any future attempts to engage in a hostile takeover, which has always been the major issue between the two companies. Riot currently owns about 19.9% of Bitfarms’ common shares, thus making it the largest shareholder of Bitfarms.
This agreement follows Riot’s initial offer earlier in 2023 to acquire Bitfarms for approximately $950 million, which was later withdrawn after Bitfarms’ board showed a lack of engagement. Riot has continued to increase its stake in Bitfarms, culminating in the current shareholding arrangement.
Changes in Bitfarms’ Leadership
As part of the settlement, Bitfarms co-founder Andres Finkielsztain has stepped down from the company’s board. In his place, Riot Platforms proposed the appointment of Amy Freedman, an expert in corporate governance and capital markets with over 25 years of experience. Freedman’s immediate addition to the board marks a significant shift in Bitfarms’ governance structure.
Additionally, the companies agreed to nominate a fifth independent director as part of Bitfarms’ ongoing governance restructuring. This will be put to a shareholder vote during the company’s upcoming special meeting, scheduled to be held virtually no later than November 20, 2024.
Special Shareholder Meeting and Standstill Provisions
The settlement arrives just before a previously planned special meeting of Bitfarms shareholders, initially set for November 6, 2024.
Despite the agreement, the meeting will still take place, though it may be delayed slightly to accommodate the additional director nomination and voting on Bitfarms’ shareholder rights plan. Riot has agreed to support the shareholder rights plan in the upcoming vote.
The settlement also includes standstill provisions preventing Riot from acquiring more than 20% of Bitfarms’ shares or making another takeover attempt until Bitfarms’ 2026 annual meeting. This ensures stability in the firm’s operations and corporate structure for the next few years, while allowing Riot to maintain its position as the largest shareholder.
Future Directions for Both Companies
Following the settlement, Bitfarms CEO Ben Gagnon reiterated the company’s focus on growth, citing plans to diversify beyond Bitcoin mining into energy generation and trading, heat recycling, and other high-value revenue streams. Riot Platforms CEO Jason Les emphasized the importance of this settlement in advancing shareholder value for both companies.
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