Ontario court bans Bitfarms miner from issuing new shares to existing owners

The company launched the initiative in an attempt to thwart a takeover by competitor Riot

26.07.2024 - 14:41

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What’s new? The Ontario Capital Markets Tribunal has ordered local miner Bitfarms to wind down an initiative to issue additional shares. It was launched in an attempt to prevent a takeover of the company by US competitor Riot, after which the latter took the company to court.

Press release

What else is known? Initially, Riot offered to buy Bitfarms for $950 million, but after receiving a rejection, it began to actively increase its stake in the company by buying shares. By mid-June, Riot’s stake in Bitfarms had reached 14%.

In response, Bitfarms board members said that when Riot’s stake exceeded 15%, they would issue additional shares at a discounted price to other existing shareholders, thus reducing the competitor’s stake. This defensive tactic is called a “poison pill.”

Riot’s management, in turn, went to court, which ordered Bitfarms to stop acting on this tactic. Riot CEO Jason Les called the court’s decision a victory for all Bitfarms shareholders, and said that the “poison pill” was “another example of the broken corporate governance that plagues Bitfarms and of the ongoing attempts by the Bitfarms directors to entrench themselves.”

Les also said that Riot intends to nominate three director candidates independent of both companies for election to Bitfarms’ board of directors: John Delaney, Amy Freedman, and Ralph Goehring. He believes these experts will be able to fix the corporate governance situation and “bring much-needed fresh perspectives.”

The next shareholder meeting to discuss the matter will be held on October 29.

Bitfarms shares are trading under the ticker BITF on the Nasdaq at $2,7, having added 4,5% overnight. Growth over the past six months has totaled 24%. The company ranks 11th in the world in terms of capitalization among mining companies, with a value of $1,14 billion.

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