CASTLE ROCK, Colo. - Riot Platforms, Inc. (NASDAQ: NASDAQ:RIOT), a significant shareholder in Bitfarms Ltd. (NASDAQ/TSX: BITF), has issued an open letter to Bitfarms' shareholders, advocating for further changes to the company's Board of Directors to enhance shareholder value. Riot, which owns approximately 19.9% of Bitfarms, has been vocal about its concerns over governance issues and the need for a boardroom overhaul at the cryptocurrency mining firm.
In its campaign for change, Riot has already influenced the resignation of two of Bitfarms' three co-founders from the board. Following public pressure from Riot and a shareholder vote, Emiliano Grodzki stepped down, and Nicolas Bonta was replaced by Ben Gagnon as CEO and board member. Fanny Philip was also appointed to the board during this period of transition.
Despite these changes, Riot insists that they are not enough to rectify what it describes as "broken governance." The company has reduced its proposed slate of new directors from three to two, nominating Amy Freedman and John Delaney to replace co-founder Andres Finkielsztain and Fanny Philip. Riot believes that the new nominees will bring the necessary independent perspectives to the board, emphasizing the importance of this ahead of the special meeting scheduled for October 29.
Riot has also criticized Bitfarms' recent actions, including a failed off-market poison pill and the timing and terms of Bitfarms' proposed acquisition of Stronghold Digital Mining, Inc. Riot argues that these decisions do not serve the best interests of shareholders and may be attempts to entrench the current board's position.
Riot has warned Bitfarms against any further defensive measures that could prejudice shareholders' interests and has stated its intention to hold the incumbent directors accountable for any such actions.
The letter concludes with a call for Bitfarms to halt its defensive tactics and allow shareholders to have their say at the upcoming special meeting. Riot looks forward to presenting its nominees and believes that their election could lead to a "Better Bitfarms."
This news is based on a press release statement from Riot Platforms, Inc.
In other recent news, Bitcoin mining company Riot Platforms has increased its stake in competitor Bitfarms to 18.9%, acquiring an additional 1 million common shares. This strategic move comes amidst ongoing tensions between the two companies, following Riot's previously withdrawn unsolicited offer to buy Bitfarms for $950 million. Bitfarms had rejected the offer, implementing a "poison pill" strategy to protect against the potential takeover.
In other developments, Bitfarms reported a decrease in revenue to $42 million and a net loss of $27 million in its Q2 2024 earnings call. Despite this, the company is optimistic about its diversification plans into high-performance computing and artificial intelligence sectors, backed by a strong liquidity position of $195 million. Bitfarms is fully funded to achieve its exahash and petahash targets by 2024 and 2025 respectively, and is actively exploring growth opportunities in the United States.
These recent developments underscore the strategic moves and financial performance of both Riot Platforms and Bitfarms in the competitive landscape of Bitcoin mining.
InvestingPro Insights
In light of Riot Platforms, Inc.'s call for changes within Bitfarms Ltd.'s Board of Directors, investors may be keen to understand the financial health and market sentiment surrounding Bitfarms. According to InvestingPro data, Bitfarms holds a market capitalization of approximately $977.91 million, which provides a sense of the company's size in the competitive landscape of cryptocurrency mining firms.
One of the InvestingPro Tips suggests that Bitfarms is not expected to be profitable this year, which aligns with the company's negative P/E ratio of -6.64, indicating that investors are not currently expecting earnings growth. This could be a concern for shareholders seeking financial stability and growth. Additionally, despite a significant revenue growth of 37.27% over the last twelve months as of Q2 2024, the company's gross profit margin is in the negative at -16.83%, underscoring the challenges Bitfarms faces in terms of profitability and cost management.
Moreover, the stock's volatility is reflected in its price movements, with a 6-month price total return of -26.28%, which might be a factor for Riot's push for board changes in hopes of stabilizing and enhancing shareholder value. It's noteworthy that Bitfarms has had a strong return over the last year, with a 64.89% price total return, which may indicate potential for recovery and growth under the right governance structure.
Investors interested in a deeper dive into Bitfarms' financials and market performance, including additional InvestingPro Tips, can find more information on the company's profile at InvestingPro. There are currently 12 additional InvestingPro Tips available that could offer further insights into Bitfarms' strategic position and investment potential.
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