As a seasoned analyst with over two decades of experience in the tech and finance sectors, I find the ongoing saga between Bitfarms, Stronghold, and Riot to be both intriguing and instructive.
Canadian Bitcoin mining company Bitfarms Ltd (traded as BITF on the TSE) has declared its plans to acquire Stronghold Digital Mining Inc (SDIG on NASDAQ) for approximately $125 million. As reported by Bloomberg, this acquisition will be facilitated through a stock transaction and an assumption of around $50 million in debt.
Terms of the Bitfarms Purchase Deal
In this agreement, shareholders owning shares in Stronghold will receive 2.52 shares from Bitfarms for every share they possess. This equates to around a 70% premium over the 90-day average trading price of Stronghold on Nasdaq as of August 6th.
By purchasing additional resources, Bitfarms plans to broaden its current mining capabilities as the industry anticipates a possible revenue squeeze following the April Bitcoin halving. The energy-generating facility of Stronghold, with its connection to local power grids, will offer extra electricity for Bitfarms to mine more Bitcoin.
Just a heads up, the Bitcoin halving happens approximately every four years, which reduces miner rewards by half. This means that mining becomes less financially appealing for them, especially if the price remains constant.
Based on this, miners strive to find innovative methods to boost their Bitcoin output to maintain their competitiveness. For some, it means expanding their mining capabilities, while others focus on maintaining their facilities and equipment. Miners generate new coins by utilizing computers within the network to confirm and process transactions, in return receiving rewards.
In May, Stronghold disclosed that they were considering a sale or other options. Based in Kennerdell, Pennsylvania, this company generates power for mining operations by burning waste coal, which makes them stand out due to their eco-friendly methods. This sets them apart from competitors like Bitfarms.
At this moment, shares for Stronghold are up by 63% before trading commences, sitting at $4.78 each. Contrastingly, though Stronghold generated $19.1 million in revenue during Q2 2024, it reported a substantial loss of $21.3 million. However, Bitfarms appears poised to acquire Stronghold, boasting a strong Q2 revenue of $41.5 million.
Bitfarms Forms Defense Against Riot
Recently, Bitfarms announced a takeover deal with Stronghold, following a prior attempt by Riot Platforms Inc (NASDAQ: RIOT) – a renowned Bitcoin miner – to acquire the company in June. Riot, holding approximately 19% stake in Bitfarms, proposed an unsolicited bid worth $950 million for the acquisition.
Responding to a takeover bid, Bitfarms implemented a defensive tactic known as a “poison pill” to thwart unwanted acquisitions. Unfortunately, this approach was halted by the Ontario Capital Markets Tribunal. In response, Riot Blockchain has upped its game in acquiring Bitfarms by purchasing an extra 10 million shares of the company, as reported by Coinspeaker.
Bitfarms continues to rank among the globe’s most significant Bitcoin mining corporations, boasting facilities based in Texas. The company’s mining activities extend beyond North America, reaching as far as South America.
As a seasoned investor with over two decades of experience in the stock market, I have seen bull markets and bear markets come and go. This year, however, has been particularly intriguing, with some stocks taking a nosedive while others have soared. Stronghold’s stock, for instance, has plummeted by almost 60%, a loss that would have significantly impacted any portfolio if one had invested heavily in it. Riot, another tech company, saw its shares decrease by 48%. Bitfarms, which I have personally followed closely due to my interest in cryptocurrencies, plunged by an alarming 19%.
Read More
Sorry. No data so far.
2024-08-21 17:13