Key Points
- Riot Platforms, a crypto mining company, has bought a 12% stake in Bitfarms.
- The purchase comes amid shorting pressure from Kerrisdale Capital.
Riot Platforms, a crypto mining firm based in Colorado, has announced its acquisition of a 12% stake in competitor Bitfarms. The purchase was made despite shorting pressure from Kerrisdale Capital.
Details of the Acquisition
On June 5, Riot Platforms revealed in a press release that it had purchased 1,460,278 common shares of Bitfarms. This purchase made Riot the beneficial owner of roughly 12% of Bitfarms.
The acquisition, which cost Riot over $3.5 million, was made at $2.45 per share. Following this, Riot expressed its intention to call a special Bitfarms shareholder meeting. At this gathering, Riot plans to nominate several independent directors to the Bitfarms board as it has concerns about the board’s poor corporate governance.
Shorting Pressure from Kerrisdale Capital
This acquisition comes amidst shorting pressure from Kerrisdale Capital. Kerrisdale recently disclosed a short position in Riot, citing issues with Riot’s equipment sourced from China and operational concerns. This led to a drop in Riot’s shares by as much as 9% to $8.84. However, after the announcement of the additional Bitfarms share purchase, Riot’s share price rebounded to $9.65, according to Google Finance data.
In late May, Riot made a $950 million acquisition bid for Bitfarms. Riot alleged that Bitfarms’ founders weren’t 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 substantial engagement.
Bitfarms responded by stating that Riot’s offer “significantly undervalues” its growth prospects. The company added that a special committee had requested “customary confidentiality and non-solicitation protections” to which Riot didn’t respond.
