TLDR:
- Bitfarms, with a $175 million deal, will take over Stronghold Digital Mining by acquiring their stock and assuming their debt obligations.
- Thanks to this agreement, Bitfarms will benefit from an additional 307 megawatts, significantly amplifying its power capacity.
- The acquisition forms a strong pillar in Bitfarms’ strategy to resist a takeover from its competitor, Riot.
- Investors in Stronghold will receive 2.52 shares of Bitfarms for each of their holdings.
- This acquisition is crucial for Bitfarms as it looks to extend its revenue streams beyond just Bitcoin mining operations.
In an impressive move, Bitcoin miner Bitfarms has decided to acquire competitor Stronghold Digital for $175 million by taking on both their stock and debt. The deal, announced on August 23, 2024, The deal will significantly enhance Bitfarms' power infrastructure, setting the stage for growth to over 950 megawatts by the end of 2025.
Terms of the acquisition include a provision where Stronghold shareholders will receive a Bitfarms stock offering equivalent to $6.02 per share, a notable 71% premium on Stronghold's previous 90-day Nasdaq trading average.
We are pleased to announce that #Bitfarms They have confirmed a final agreement to make this acquisition official. @Stronghold_DM .
By bringing Stronghold under its wing, Bitfarms gains not only mining operational expertise but also strategic access to the expansive PJM grid network, a major electricity wholesale provider. pic.twitter.com/HemcStdETS
— Bitfarms (@Bitfarms_io) August 21, 2024
Ben Gagnon, CEO of Bitfarms, proudly announced the acquisition after three years of negotiations, marking it as a pivotal step for the company's future growth.
The expansion is part of Bitfarms' vision to achieve a balanced energy portfolio with nearly half of it located in the United States by 2025.
Amidst declining rewards due to recent blockchain halving, Bitcoin miners like Bitfarms are seeking transformative opportunities for operational cost efficiency.
This downturn is driving miners to explore new opportunities like high-performance computing and AI processing to diversify their revenue.
Industry observers believe this strategic move could help bolster Bitfarms’ defense against Riot’s takeover ambitions. The acquisition is perceived as a defense mechanism against hostile takeover attempts by Riot Platforms, which has held a significant stake in Bitfarms since 2024. Enlarging its market footprint and value via Stronghold acquisition could make Bitfarms a harder, costlier target for Riot.
This move is aimed at diversifying Bitfarms’ income sources beyond relying heavily on Bitcoin mining. CEO Gagnon elaborated on this strategy.
Through this integration, Bitfarms is advancing towards energy generation, energy trading, and securing valuable sites for high-performance computing and AI, paving the way for exponential growth and shareholder value.
Stronghold was already preparing for a potential sale, as revealed in their Q1 report, indicating their openness to selling parts or all of the company.
Post-announcement, Stronghold's stock surged by roughly 55% in pre-market action, while Bitfarms experienced a 7% drop.
This acquisition is another step in Bitfarms’ series of tactical measures to counter Riot’s acquisition advances.
In previous efforts, Bitfarms had initiated a “poison pill” strategy to deter excessive share acquisition that might reach 20%.
Editor-in-Chief of Blockonomi also leads Kooc Media, pushing for open-source software, blockchain tech, and a free Internet. His insights have been featured by big names such as Nasdaq, Dow Jones, and Forbes, among others. Reach him at [email protected].
