As an analyst with years of experience in the cryptocurrency market, I find this latest move by Bitfarms to acquire Stronghold Digital intriguing, especially given the current dynamics within the industry. The acquisition, valued at approximately $175 million, represents a strategic step for Bitfarms, significantly expanding its energy portfolio and increasing its capacity to over 950 MW by the end of 2025.
Bitfarms, a major player in the cryptocurrency mining field, has finalized an agreement for a merger with Stronghold. This merger will be conducted through a swap of stocks rather than cash.
In simpler terms, the Canadian cryptocurrency mining company, Bitfarms, plans to purchase its American competitor, Stronghold Digital, for around $175 million. This deal consists of $125 million in equity value and an additional $50 million in debt that Stronghold currently holds.
In a press release dated August 21st, Bitfarms announced that the acquisition of Stronghold would bring substantial resources, such as a hashrate of 4.0 Exahash per second (EH/s) by June 2024, along with a power capacity of 165 Megawatts (MW). The company is also the owner of over 750 acres of land and two power plants situated in Pennsylvania.
Contrary to what some news reports may suggest, the stock price of Bitfarms (BITF) dropped by 7.2%, down to $2.19 during pre-market trades, based on data from Nasdaq.
The upcoming merger is projected to broaden Bitfarms’ energy resources, growing its output to around 950 MW by the year 2025, with possible future expansions potentially raising the total capacity to 1.6 GW. Bitfarms CEO, Ben Gagnon, referred to this acquisition as a significant milestone, expressing optimism that the company would have a clear path for potential growth up to 1.6 GW, with around 66% of this capacity situated in the U.S., a significant increase from the current 6%.
“We’re putting our plan into action by merging with power production, increasing our energy market influence, and acquiring two promising locations for High Performance Computing (HPC) and Artificial Intelligence (AI). These moves will help us branch out from Bitcoin mining, aiming to generate more lasting shareholder value over the long term.”
Ben Gagnon, Bitfarms CEO
Bitfarms expands portfolio amid takeover attempts
According to Bitfarms, the merger, which has been endorsed by both companies’ boards, is anticipated to be finalized during the first quarter of next year, assuming it receives approval from shareholders and regulators.
According to the announcement, Stronghold shareholders will get 2.52 shares of Bitfarms for every share they own. This exchange gives a 71% increase over Stronghold’s average price on Nasdaq over the past 90 days (as of Aug. 16). The merged entity is expected to generate approximately $10 million in annual cost savings after the deal is finalized.
The recent announcement about a merger occurs amidst Bitfarms being targeted for takeover by Riot Platforms, a rival Bitcoin mining corporation. Previously reported by crypto.news, Riot purchased 1 million common shares of Bitfarms, boosting its ownership to roughly 18.9%. This action followed Riot’s $950 million takeover proposal from earlier this year, which was withdrawn following unsuccessful negotiations with Bitfarms’ board.
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2024-08-21 16:20