Tag: Riot Platforms

In the second quarter of this year, Riot Platforms recorded a net loss of $84.4 million, compared to $27.4 million in the previous year’s same quarter.

The American Bitcoin mining firm’s widened losses are a result of the continued impact of April’s Bitcoin halving.

Riot’s Q2 Performance

According to the quarterly report, Riot reported a total revenue of $70 million in the second quarter of 2024, down from $76.7 million in the same period last year. This decrease was primarily driven by a $9.7 million drop in Engineering revenues, partially offset by a $6 million rise in Bitcoin mining revenue.

The company produced 844 Bitcoin during the same period, which represented a 52% decrease from 1,775 BTC in Q2 2023, attributed to the April 2024 block subsidy ‘halving’ and increased network difficulty.

The average direct cost to mine Bitcoin soared to $25,327 per BTC, up from $5,734 in Q2 2023, driven by the halving and a 68% rise in the global network hash rate. Despite these challenges, Riot said that its mining revenue grew to $55.8 million, compared to $49.7 million in the prior year, owing to higher average BTC prices and an improved operational hash rate.

The company asserted that it maintained a strong financial position with $646.5 million in working capital, including $481.2 million in cash. Additionally, it held 9,334 unencumbered Bitcoin, worth approximately $585 million, all mined through its operations.

Riot CEO Jason Les commented,

“The second quarter saw the Bitcoin network ‘halving’ in April of this year, a preprogrammed event whereby the Bitcoin block subsidy received by miners from the network is cut in half every four years. Despite this reduction in available production for all Bitcoin miners, Riot posted $70.0 million in revenue for the quarter and maintained strong gross margins in our core Bitcoin mining business.”

Block Mining Acquisition

Riot acquired the Kentucky-based firm Block Mining in a $92.5 million deal last month, which included $18.5 million in cash from Riot’s reserves and $74 million in Riot common stock.

Following the move, the mining firm reported an immediate increase in hash rate, expanded its geographical footprint, and entered additional energy markets outside the Electric Reliability Council of Texas (ERCOT) region.

Riot Platforms has announced the purchase of an additional 1,432,063 shares of Bitfarms. The acquisition, completed on June 10 at approximately $2.7 per share, represents an investment of around $3.87 million.

This latest move brings Riot’s total holdings to approximately 57.62 million shares, accounting for about 14% of Bitfarms.

Riot’s Ongoing Takeover

This announcement is part of Riot’s ongoing takeover attempt of Bitfarms. Last month, Riot made a bid to acquire Bitfarms for roughly $950 million. On May 28, Riot secured a 9.25% stake, marking it the company’s largest shareholder. Riot further expanded its stake by purchasing an additional 1.5 million shares on June 5.

In response to Riot’s aggressive acquisition strategy, Bitfarms has taken defensive measures, most notably adopting a “poison pill” earlier this week. This strategy aims to prevent the takeover by making Bitfarms less attractive to potential acquirers and diluting Riot’s ownership stake.

Under Bitfarms’ strategy, if any entity acquires more than 15% of Bitfarms’ shares between June 20 and September 10, the company will issue new shares to dilute that entity’s ownership stake.

Meanwhile, Bitfarms’ stock witnessed a 15% rise earlier today following an announcement that its 2025 hash rate is expected to exceed 35 EH/s due to the development of its first large-scale mining site in the United States.

Riot Platforms CEO Slams Bitfarms’ Defensive Tactics

Riot Platforms CEO Jason Les has been vocal in his criticism of Bitfarms’ defensive tactics. In a statement on Wednesday, Les said, “Instead of engaging with us privately and in good faith, Bitfarms has responded by implementing an off-market poison pill with a trigger well below the customary 20% threshold.”

Les further accused the Bitfarms Board of entrenchment and neglecting shareholder interests, referencing the recent removal of company co-founder Emiliano Grodzki by shareholders less than two weeks ago.

“This action further demonstrates the Bitfarms Board’s entrenchment and disregard for the perspectives of its shareholders,” Les stated. He also called for the resignation of Chairman and interim CEO Nicolas Bonta, citing poor corporate governance under Bonta’s leadership since 2018.

“We will continue to push to address the serious corporate governance issues at Bitfarms and ensure that shareholders have a say on the Company’s path forward.” In line with this, Riot Platforms also has plans to request for a special meeting of Bitfarms shareholders to nominate several independent directors to the board.

Bitfarms announced on Monday that its Board of Directors has unanimously approved a shareholder rights plan, effective immediately, to preserve the integrity of its strategic alternatives review process in response to an unsolicited takeover offer from Riot Platforms Inc.

The plan, commonly known as a “poison pill,” is intended to prevent any party from gaining control of Bitfarms without providing fair value to all shareholders.

‘Poison pill’ Strategy

A poison pill strategy is a defensive measure used to prevent corporate takeovers by making a deal too expensive for the acquiring company. Bitfarms stated that it would issue new stock to existing shareholders, diluting the stake of any entity pursuing a hostile takeover.

Under the Rights Plan, one right will be issued for each common share outstanding as of June 20. These rights will become exercisable if any person or entity acquires 15% or more of Bitfarms’ outstanding common shares without complying with the plan’s “Permitted Bid” provisions.

Permitted Bids must be made to all shareholders, remain open for 105 days, and meet other specific conditions. While the Rights Plan is effective immediately, it requires shareholder ratification within six months.

Bitfarms also disclosed that the Toronto Stock Exchange (TSX) will defer its consideration of the Rights Plan until it is assured that the appropriate securities commission will not intervene. This deferral does not affect the plan’s adoption or operation, which will remain effective for a minimum of six months from June 10, the date of adoption, unless terminated earlier.

Riot’s Takeover Plans

Riot Platforms made its unsolicited proposal public in May, offering to buy Bitfarms for about $950 million. The company also expressed its intention to request a special shareholder meeting to add independent directors to Bitfarms’ board.

This came after Bitfarms rejected Riot’s takeover approach in April. Riot initially offered $2.30 per share in cash and stock for Bitfarms, approximately 20% above the firm’s share price before the offer was made.

Following an evaluation of the proposal, Bitfarms’ Special Committee of independent directors concluded that Riot’s offer significantly undervalued the company and its growth prospects.

On May 28, Riot acquired a 9.25% stake in Bitfarms, becoming the company’s largest shareholder. Riot further increased its stake by purchasing an additional 1.5 million shares on June 5, raising its total ownership to approximately 12%. By June 5, Riot beneficially owned 47,830,440 shares of Bitfarms.