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 Bitfarms’ shareholders. At this meeting, Riot plans to nominate “several well-qualified and independent directors” to the Bitfarms board, citing concerns regarding the board’s 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 Riot’s equipment sourced from China and operational concerns, causing Riot’s shares to drop by as much as 9% to $8.84. However, Riot’s 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 Bitfarms’ 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 Riot’s offer “significantly undervalues” its growth prospects. The company added that a special committee had requested “customary confidentiality and non-solicitation protections” to which Riot didn’t respond.

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