Miner tensions rise as Riot now owns 14% of Bitfarms shares

Bitcoin mining giant Riot Platforms continues to buy more Bitfarms shares after its bid to buy the company outright was rejected.

Toronto-based Bitfarms said Riot’s April takeover attempt undervalued the company. At that time, the Colorado-headquartered miner offered to purchase Bitfarms’ remaining shares for $2.30 each.

Bitfarms’ share price was $2.81 before the market opened Friday.

Despite that, Riot continues to snatch up Bitfarms shares, buying roughly 1.4 million more for nearly $3.9 million on Thursday. In all, Riot now owns 14% of the company’s shares.

Read more: A deeper look at Riot’s ‘hostile’ bid to take over Bitfarms

Riot could look to increase or decrease its position in the competitor, the company noted in a Friday news release. It still plans on calling a special shareholder meeting in order to nominate “well-qualified and independent” directors.

The company cites concerns about Bitfarms’ corporate governance. Bitfarms ousted Geoffrey Morphy from the CEO post after he filed a statement of claim against Bitfarms in the Superior Court of Ontario.

Bitfarms, which still seeks a new permanent CEO, has said its committee — currently considering the company’s next steps — is made up solely of independent directors.

It put in place a shareholder rights plan earlier this week to attach a “right” to each common share issued after June 20. Those rights become exercisable if an owner holds at least 15% of Bitfarms’ outstanding shares between June 20 and Sept. 10.

Read more: Bitfarms plays defense as rival Riot still eyes takeover

Such a move essentially seeks to limit the control of a shareholder, like Riot, to acquire the company pending the strategic review.

Still, the plan does not preclude Riot or other shareholders from making unsolicited takeover bids, Bitfarms said in a Wednesday news release. Rather, it “preserves the integrity” of its review process as it decides the company’s best path forward.

“Riot’s comments make clear their frustration lies in no longer being able to tilt the scale towards their opportunistic non-binding offer, cloaked in vague concerns about corporate governance,” Bitfarms added in a statement.

Riot Platforms, which primarily operates in Texas, has a deployed hash rate of 14.7 exahash per second.

Bitfarms had an operating hash rate of 7.5 EH/s at the end of May. The company intends to grow that to 21 EH/s by the end of the year.

A Riot takeover of Bitfarms would be the first big deal between publicly traded miners after the Bitcoin halving — an event after which per-block mining rewards dropped from 6.25 BTC to 3.125 BTC.

Industry watchers had predicted that the segment would see consolidation around the event, given that some miners were expected to struggle in the new environment.

Architect Partners’ Elliot Chun told Blockworks at the time, however, that he didn’t expect large public miners to join forces around the halving — unless they operate in different regions.