Riot Platforms Demands Bitfarms to Stop ‘Defensive Tactics’ in Open Letter
Date: 2024-09-04 Author: Gabriel Deangelo Categories: BUSINESS
Riot, which owns about 19.9% of Bitfarms shares, has criticized recent actions by the Bitfarms board, including changes to the board and a proposed acquisition of Stronghold Digital Mining, Inc.
Riot argues that these measures are insufficient and merely reactive, calling for further board changes to increase shareholder value.
Riot Demands Governance Reforms and Criticizes Bitfarms’ Financial and Executive Decisions
Since Riot began its campaign, there have been significant changes, including the resignation of Emiliano Grodzki and Nicolas Bonta, two of Bitfarms’ three co-founders, and the appointment of Fanny Philip and Ben Gagnon to the board and leadership positions.
However, Riot believes that these changes are merely a response to pressure from the company and do not address the deeper governance issues at Bitfarms.
Riot has pointed to several specific complaints, accusing Bitfarms of prioritizing board protection over shareholder engagement. One of the main points of contention was the failed implementation of a shareholder rights plan known as the “Poison Pill,” which would have included a 15% threshold, contrary to legal and governance standards.
The plan was overturned by the Ontario Capital Markets Tribunal following Riot’s intervention, which the company believed protected shareholders from a negative precedent in the Canadian capital markets.
Riot also criticized Bitfarms for appointing Fanny Philippe to its board of directors without consulting Riot, despite being the largest shareholder and having a list of qualified candidates.
Riot also expressed serious concerns about Bitfarms’ decision to acquire Stronghold Digital Mining for $175 million, including $50 million in assumed debt. Riot questioned the timing and valuation of the deal, suggesting that it was intended to bolster the current board rather than serve shareholders’ interests.
Riot’s Director Replacement Proposal
Going forward, Riot has proposed the election of two independent and highly qualified candidates, Amy Friedman and John Delaney, to replace Bitfarms’ current directors, Andres Finkelstein and Fanny Philippe.
Riot believes that the addition of Friedman and Delaney to the board will bring critical experience in corporate governance, public company board service, and transaction oversight, which is necessary to steer Bitfarms toward a more shareholder-focused strategy.
Riot also cautioned Bitfarms against entering into financial transactions prior to the shareholder meeting, saying such actions could be unfairly dilutive to shareholders.
Riot expressed concern that the current board could take steps to entrench itself to the detriment of shareholders, vowing to hold directors accountable if they take actions that undermine the integrity of the upcoming elections.
Riot’s message to Bitfarms shareholders is clear: the company must stop its defensive tactics and allow shareholders to have their say at the upcoming special meeting.
Earlier this year, Bitfarms reported a 21% increase in bitcoin production for June 2024, despite the halving event that reduced the block reward by 50%. The company also achieved a 96% year-on-year increase in installed hashrate capacity and announced plans to expand its mining capacity to 21 EH/s by the end of 2024 and over 35 EH/s by 2025.
