Colorado-headquartered crypto mining company Riot Platforms has acquired a 12% stake in Bitfarms despite facing shorting pressure from Kerrisdale Capital.
Riot Platforms announced on June 5 that it has purchased 1,460,278 common shares of Bitfarms, making it the beneficial owner of approximately 12%. The shares were acquired at $2.45 each, costing Riot over $3.5 million in total.
Following this acquisition, Riot intends to call a special meeting of Bitfarmsβ shareholders. At this meeting, Riot plans to nominate βseveral well-qualified and independent directorsβ to the Bitfarms board, citing concerns regarding the boardβs track record in corporate governance.
This move comes amid shorting pressure from Kerrisdale Capital, which recently disclosed a short position in Riot. Kerrisdale cited issues with Riotβs equipment sourced from China and operational concerns, causing Riotβs shares to drop by as much as 9% to $8.84. However, Riotβs share price rebounded to $9.65 following the announcement of its additional Bitfarms share purchase.
In late May, Riot announced a $950 million acquisition bid for Bitfarms, alleging that Bitfarmsβ founders weren’t acting in the best interests of all shareholders. Riot claims its proposal, initially submitted privately in late April, was rejected by the Bitfarms board without substantive engagement.
Bitfarms responded by stating that Riotβs offer βsignificantly undervaluesβ its growth prospects. The company added that a special committee had requested βcustomary confidentiality and non-solicitation protectionsβ to which Riot didnβt respond.
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