Mining company Bitfarms has reacted to an open letter from Riot Platforms that criticized recent adjustments to its board, labeling its corporate governance practices as flawed.

In its official statement, Bitfarms maintained that the upcoming special shareholder meeting, set for October 29, 2024, does not pertain to corporate governance issues as asserted by Riot Platforms. Rather, Bitfarms suggested that Riot is advocating for changes to serve its own interests.

The company emphasized that its recent adjustments to the board and management were made independently of Riot Platforms.

Bitfarms concluded the letter by defending its proposed acquisition of the mining firm Stronghold, aiming to expand its operations and realign its energy portfolio in favor of the United States.

Heightening Corporate Dispute

As the largest shareholder in Bitfarms, Riot Platforms holds a 19.9% stake. In May 2024, Riot Platforms intensified its efforts to pressure Bitfarms into accepting a $950 million acquisition offer, following a private purchasing proposal made in April.

In light of the increasing pressure, Bitfarms instituted a shareholder rights plan to counter what they viewed as a hostile takeover attempt. This plan proposed selling discounted shares to investors if any party’s stake in Bitfarms rose above 15%.

To avoid triggering this shareholder plan, Riot Platforms, which owned 14.9% of Bitfarms at that time, shifted from acquiring additional shares to proposing three independent candidates for the board of directors.

The ongoing tensions prompted Bitfarms to call for a special shareholder meeting on October 29, 2024, to address Riot Platforms’ takeover efforts.

In July 2024, the Ontario Capital Markets Tribunal, a regulator in Canada, compelled Bitfarms to abandon its “poison pill” strategy, which involved implementing a shareholder rights plan.

Riot Platforms Increases Ownership in Bitfarms

Following the mandatory cancellation of Bitfarms’ shareholder rights plan, Riot Platforms raised its stake in Bitfarms to 18.9%, and subsequently to 19.9%.

In its most recent correspondence to Bitfarms shareholders, Riot Platforms emphasized the necessity for Bitfarms to consider the independent board candidates it has proposed and advised against actions that might further “entrench” the current board structure.

The correspondence highlighted Bitfarms’ proposed acquisition of Stronghold, indicating that the mining company has long been for sale without attracting offers from Bitfarms’ competitors at the set price.