Riot Platforms, Inc. has made a significant move by requisitioning a special meeting of Bitfarms Ltd. shareholders to reconstitute the Bitfarms board of directors. Riot, which currently owns approximately 14.9% of Bitfarms, is seeking to bring in three highly qualified and independent directors to address what it perceives as broken corporate governance at Bitfarms.
One of the key issues raised by Riot is the recent CEO succession process at Bitfarms. Bitfarms terminated its CEO, Geoffrey Morphy, shortly after he filed a $27 million lawsuit against the company. This sudden termination without a transition plan in place has raised concerns about the board's leadership and its ability to effectively manage CEO succession.
Riot also highlighted its attempts to engage constructively with Bitfarms regarding a potential combination, including a private acquisition proposal. However, Bitfarms' board demanded an excessive and off-market confidentiality agreement, and later advised that the offer was too low without providing guidance on acceptable terms. Bitfarms also implemented a shareholder rights plan with a 15% trigger, which Riot believes sets a dangerous precedent for Canadian boards.
At Bitfarms' recent annual general and special meeting of shareholders, co-founder Emiliano Grodzki was not re-elected to the board, indicating a lack of confidence in the current board among shareholders. Riot has nominated three independent and highly qualified individuals—John Delaney, Amy Freedman, and Ralph Goehring—to bring fresh perspectives and corporate governance oversight to Bitfarms.
Riot has formally withdrawn its previous proposal to acquire all Bitfarms common shares at a price of US$2.30 per share but stands ready to engage and negotiate with a reconstituted Bitfarms board for a potential combination.
As of the date of the press release, Riot beneficially owns approximately 14.9% of Bitfarms' issued and outstanding common shares. Riot has indicated its intention to review its investment in Bitfarms on a continuing basis and may consider various actions depending on factors such as discussions with Bitfarms and/or its board, Bitfarms' financial position, market conditions, and other investment opportunities.
Riot's move to requisition a special meeting and nominate new directors reflects its commitment to effecting change at Bitfarms and pursuing its vision of becoming the premier and largest publicly listed bitcoin miner globally through a potential combination with Bitfarms. Today the company's shares have moved -3.5% to a price of $9.21. Check out the company's full 8-K submission here.
