Bitfarms Reacts to Riot Platforms’ Proposed Board Changes

September 05, 2024 06:42 PM AEST | By Team Kalkine Media

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Bitfarms Reacts to Riot Platforms’ Proposed Board Changes — Image source: Shutterstock

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Riot Platforms has described recent changes to Bitfarms' board of directors as a positive development but emphasized that additional reforms are necessary. In response, Bitfarms has defended its corporate governance practices and the upcoming special shareholder meeting scheduled for October 29, which Riot Platforms had criticized.

Bitfarms contends that the special meeting is unrelated to governance issues, contrary to {Riot} Platforms' assertions. The company argues that Riot Platforms' proposed board changes are motivated by self-interest rather than genuine concern for Bitfarms' governance. Bitfarms maintains that its recent board and management adjustments were made independently of Riot Platforms' influence.

Bitfarms also addressed Riot Platforms' criticism of its proposed acquisition of mining company Stronghold, which aims to expand operations and shift its energy portfolio towards the U.S. market. Bitfarms defended this move as a strategic decision to enhance its business operations.

The dispute between Riot Platforms and Bitfarms intensified when Riot Platforms, which holds a 19.9% stake in Bitfarms, began exerting pressure for a $950 million takeover bid in April 2024. Bitfarms responded by implementing a shareholder rights plan designed to thwart the takeover attempt. This plan included issuing discounted shares to investors if any party increased their stake to 15%.

To circumvent the shareholder rights plan, Riot Platforms shifted its strategy from acquiring more shares to proposing three independent candidates for Bitfarms' board. This development led to Bitfarms calling a special shareholder meeting to address Riot Platforms' takeover bid.

In July 2024, the Ontario Capital Markets Tribunal compelled Bitfarms to abandon its shareholder rights plan. Following this, Riot Platforms increased its stake in Bitfarms to 18.9% and then 19.9%. Riot Platforms has since urged Bitfarms to accept its proposed independent board members and cautioned against further entrenching the current board or engaging in transactions that could undermine shareholder interests.

The latest open letter from Riot Platforms also questioned the rationale behind Bitfarms' proposed acquisition of Stronghold, pointing out that the mining firm had been on the market for some time without attracting competitive offers at its listed price.

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