Riot Platforms, a major player in the Bitcoin mining industry, has ramped up its ownership in competitor Bitfarms to 18.9%, the company announced on Tuesday. This strategic move involves the purchase of an additional 1 million Bitfarms shares, bringing Riot's total holdings to approximately 85.3 million shares.
The latest acquisition represents a slight increase from Riot's previous 18.68% stake in Bitfarms. This development is part of an ongoing corporate tug-of-war that began in April when Riot attempted to acquire its Canadian rival with a $950 million offer. Bitfarms, however, rebuffed the proposal, arguing that it significantly undervalued the company.
Bitfarms Fortifies Defenses Against Hostile Takeover
In response to Riot's aggressive moves, Bitfarms has been actively working to protect itself from a potential hostile takeover. After a Canadian tribunal recently nullified Bitfarms' initial "poison pill" defense strategy, the company swiftly implemented a second such measure. This new safeguard is designed to activate if any single entity attempts to acquire more than 20% of the company without board approval.
The "poison pill" strategy, also known as a shareholder rights plan, allows existing shareholders to purchase additional shares at a discount. This tactic makes it more challenging and expensive for a potential acquirer to gain a controlling stake in the company.
Riot Considers Its Next Moves
As the situation continues to evolve, Riot Platforms has stated that it will carefully assess its investment in Bitfarms. The company's future actions will likely be influenced by ongoing negotiations between the two firms, including discussions about a potential shareholder meeting and changes to Bitfarms' board composition.
Riot has expressed interest in securing three board positions at Bitfarms and has indicated a willingness to explore potential future deals. This suggests that while the immediate acquisition attempt may have been thwarted, Riot remains committed to increasing its influence over its rival.
As this corporate drama unfolds, industry observers are keenly watching to see how this power struggle between two major Bitcoin mining companies will reshape the competitive landscape in the cryptocurrency mining sector.