CASTLE ROCK, Colo. - Riot Platforms, Inc. (NASDAQ: NASDAQ:RIOT), a significant shareholder in Bitfarms Ltd. (NASDAQ: BITF), has called for a special meeting to reconstitute the Bitfarms board. Riot, holding approximately 14.9% of Bitfarms, aims to overhaul the current board, citing poor governance and a failure to realize the company's full potential.
The special meeting will allow shareholders to vote on the removal of Bitfarms Chairman and Interim CEO Nicolas Bonta, director Andrés Finkielsztain, and any recent appointees. Riot blames these individuals for Bitfarms' governance issues and seeks their replacement with three independent nominees: John Delaney, Amy Freedman, and Ralph Goehring.
Riot's move follows a series of unsuccessful attempts to engage with Bitfarms over a potential merger. After Bitfarms rejected Riot's acquisition offer of US$2.30 per share, Riot withdrew its proposal, awaiting negotiation with a new board.
The proposed nominees are touted for their independence and expertise in corporate governance and transactions. Delaney brings public policy knowledge, Freedman offers capital markets experience, and Goehring has a background in finance and energy.
Riot's decision to call for board changes comes after Bitfarms' shareholders expressed discontent, notably by not re-electing co-founder Emiliano Grodzki during the May 31, 2024, shareholder meeting. Riot argues that the current board's actions, including the implementation of a shareholder rights plan with a 15% trigger, reflect a disregard for shareholder interests.
Riot believes that a reconstituted board could better oversee a strategic review and potentially lead to a profitable merger between Riot and Bitfarms, creating a leading Bitcoin mining entity.
The company has stated that it will continue to review its investment in Bitfarms and may take further action depending on the outcome of the special meeting and other factors. This announcement is based on a press release statement.
In other recent news, Bitfarms Ltd. has been the focus of several significant developments. The company reported a 9% revenue increase from the previous quarter, reaching $50 million. Additionally, Bitfarms announced a major expansion in the United States, with plans to construct a new mining facility in Sharon, Pennsylvania. This expansion, along with the recently announced growth in Yguazu, is expected to add a substantial 14 EH/s to its operations in 2025.
Riot Platforms Inc. has increased its stake in Bitfarms to around 12.00%, indicating potential influence over the company's corporate decisions. This development follows Riot's criticism of Bitfarms' shareholder rights plan, marking a potential shift in corporate governance.
In terms of analyst ratings, H.C. Wainwright maintained a Buy rating on Bitfarms stock, while Cantor Fitzgerald initiated coverage with an Overweight rating and a new share target of $5.00. However, Stifel Canada downgraded Bitfarms stock from Speculative Buy to Hold due to tensions surrounding Riot Platforms' attempted acquisition.
These recent developments suggest strategic moves and financial performance by Bitfarms Ltd. in the cryptocurrency mining industry. As always, investors are advised to consider these facts in the context of their individual investment strategies.
InvestingPro Insights
As Riot Platforms, Inc. seeks to reshape the board of Bitfarms Ltd. (NASDAQ: BITF), investors are closely monitoring the financial health and performance metrics of Bitfarms. Here are some key insights from InvestingPro:
InvestingPro Data shows Bitfarms holds a market capitalization of approximately $1.21 billion USD. Despite a challenging financial landscape indicated by a negative P/E ratio of -7.79, the company has achieved a notable revenue growth of 26.09% over the last twelve months as of Q1 2024. Furthermore, the company's stock price has demonstrated significant volatility, with a 45.54% return over the last month and a 93.42% return over the past year, highlighting its dynamic nature in the market.
From the perspective of InvestingPro Tips, two critical points stand out for Bitfarms:
1. Analysts are optimistic about sales growth in the current year, aligning with Riot's vision of unlocking the company's full potential post-board reconstitution.
2. On the flip side, Bitfarms suffers from weak gross profit margins, which may be a focal point for the proposed new board members who bring expertise in finance and corporate governance.
These insights suggest that while Bitfarms is navigating through financial complexities, there is a potential upside as seen in its revenue growth and the recent strong return on its stock price. Investors considering Bitfarms may find additional valuable InvestingPro Tips on the company's performance and future outlook by visiting https://www.investing.com/pro/BITF.
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