TL;DR
- Bitfarms acquires Stronghold for $125 million in stock, increasing its mining capacity.
- The deal includes a 70% premium for Stronghold shareholders and assumes $50 million in debt.
- The transaction occurs amid a $950 million offer from Riot Platforms and sector challenges due to Bitcoin’s halving.
Bitfarms Ltd., a prominent Bitcoin mining firm, has completed the acquisition of Stronghold Digital Mining Inc. in a deal valued at approximately $125 million in stock. The transaction takes place amid the challenging economic context facing the mining sector.
The agreement stipulates that Stronghold shareholders will receive 2.52 Bitfarms shares for each share they hold, representing a premium of about 70% over Stronghold’s 90-day volume-weighted average price on Nasdaq as of August 16.
Additionally, the transaction includes an assumed debt of approximately $50 million. The acquisition will enable Bitfarms to expand its mining capacity by providing access to increased energy resources through Stronghold’s power generation assets, which operate with a coal-based energy infrastructure connected to local grids.
Bitfarms Gives Riot Platforms a Firm ‘NO’
The purchase occurs amid an unsolicited $950 million offer from Riot Platforms Inc. to acquire Bitfarms, which the company rejected in April. In response, Bitfarms implemented a “poison pill” defense strategy and scheduled a special shareholder meeting for October 29 to address Riot’s attempt to replace three board members.
In the second quarter of the year, the miner reported $41.5 million in revenue, while Stronghold recorded a loss of $21.3 million with $19.1 million in revenue. Riot, one of the largest Bitcoin mining companies globally, reported $70 million in revenue during the same period.
Bitcoin mining faces a revenue crisis due to the recent halving that occurred in April this year, which reduced rewards by half. Among various strategies, miners are seeking to expand their operations through acquisitions to mitigate these impacts.
