Bitfarms Appoints New CEO Amidst Ongoing Dispute with Riot

In the latest development in the corporate saga involving two prominent Bitcoin mining companies, Bitfarms and Riot Platforms, new leadership appointments and a significant website launch have marked a contentious battle for control.

Recently, Bitfarms appointed Ben Gagnon, the former Chief Mining Officer who joined the company in 2019, as its new CEO.

Riot Platforms’ New Campaign

This leadership change coincides with Riot Platforms’ strategic maneuvering to reshape Bitfarms’ board of directors through a special shareholders’ meeting, which remains unscheduled. Simultaneously, Riot Platforms launched a new campaign aimed at restructuring Bitfarms’ board of directors.

The launch of “www.ABetterBitfarms.com” marks a critical step in Riot’s strategy to rally shareholder support for its agenda.

The website outlines Riot’s concerns regarding what it perceives as governance failures under the current Bitfarms leadership and details Riot’s plan to inject new leadership into the board.

The campaign for change at Bitfarms comes after Riot withdrew a $2.30 per share acquisition bid, choosing instead to focus on securing three board seats to influence the company’s future direction.

This shift in strategy followed Riot’s earlier $950 million offer to acquire Bitfarms, which was outright rejected. Expressing frustration over the stalled negotiations and perceived poor governance, Riot is now advocating for pivotal leadership changes to facilitate constructive merger discussions.

Riot’s proposal includes nominating three independent directors who bring a wealth of corporate governance experience. The nominees are John Delaney, former mayor of Jacksonville; Amy Freedman, former CEO of Kingsdale Advisors; and Ralph Goehring, a seasoned CFO in the energy sector.

Riot believes that these individuals will provide the necessary expertise and fresh perspectives that Bitfarms needs to thrive.

Bitfarms’ Defensive Tactics

This push for governance reform is underscored by Riot’s Investment Trust, which holds a 15% stake in Bitfarms. The trust has been vocal about the necessity of these board changes, viewing them as critical to unlocking shareholder value and advancing discussions on the merger.

In a strategic response, Bitfarms announced the appointment of Fanny Philip as an independent board member on June 27. This move appears to be a defensive tactic against Riot’s aggressive push for board reconstitution.

The unfolding corporate battle further intensified when Bitfarms adopted a “poison pill” defense. This strategy allows shareholders owning a 15% stake as of September 20 to increase their holdings up to 20% without board approval, a clear attempt to thwart Riot’s takeover efforts.

This corporate skirmish traces back to deeper issues following the departure of Bitfarms’ former CEO Geoffrey Morphy, who resigned in May after filing a lawsuit against the company seeking $27 million for breach of contract, wrongful dismissal, and damages.

Riot’s public campaign is a direct reaction to what it describes as a blockade against productive merger talks due to poor governance.

Differing Visions for the Future

In addition to governance issues, the tension reflects differing visions for the future of Bitfarms. Riot’s campaign emphasizes the need for a transformative approach to leadership at Bitfarms to foster an environment conducive to acquisition discussions.

By advocating for these changes, Riot aims to restore shareholder confidence and propel Bitfarms forward.

As both companies navigate this turbulent period, their actions and strategies are closely monitored by investors and the broader market. Bitfarms (BITF) shares are currently trading at $2.66, showing a modest 0.56% decrease on the day and a significant 15.5% rise over the past 30 days.

In contrast, Riot (RIOT) shares have seen a decrease, trading at $9.32, down 3.37% on the day and 5.91% over the last month.

The outcome of this corporate power struggle will likely have far-reaching implications for the strategic directions and market standings of both Bitfarms and Riot.

As Riot continues its public campaign and Bitfarms maneuvers to counter these moves, the industry watches keenly, knowing that the result could reshape the landscape of Bitcoin mining operations and influence shareholder value significantly.