Riot Platforms, Inc. Reports Beneficial Ownership of 18.9% in Bitfarms Ltd.

Rhea-AI Summary

Riot Platforms, Inc. has increased its beneficial ownership in Bitfarms to 18.9% of the issued and outstanding Common Shares. On August 13, 2024, Riot acquired 1,000,000 common shares of Bitfarms through normal course purchases on the Nasdaq Stock Market and other open markets. The shares were purchased at a weighted average price of US$2.28 per share, for an aggregate amount of US$2,280,800.00.

Prior to this acquisition, Riot owned 84,293,054 Common Shares (18.68%). After the purchase, Riot now owns 85,293,054 Common Shares (18.90%). Riot has also requisitioned a special meeting of shareholders to seek removal of certain Bitfarms directors and replace them with independent candidates. Riot intends to review its investment in Bitfarms continuously and may consider various actions, including increasing or decreasing its position, hedging its economic exposure, or proposing further changes to Bitfarms' board composition.

Positive

• Riot Platforms increased its ownership stake in Bitfarms to 18.9%, demonstrating confidence in the company
• Riot acquired 1,000,000 additional shares at a weighted average price of US$2.28, investing US$2,280,800.00

Negative

• Riot's requisition for a special meeting to remove certain Bitfarms directors may lead to management instability
• Potential for further share acquisitions or sales by Riot could create stock price volatility for Bitfarms

Insights

Financial Analyst

Riot Platforms' acquisition of an additional 1,000,000 shares in Bitfarms, increasing its ownership to 18.9%, is a significant development in the cryptocurrency mining sector. This move, coupled with Riot's request for a special shareholder meeting to restructure Bitfarms' board, suggests a potential activist investor strategy. The average purchase price of US$2.28 per share indicates Riot's confidence in Bitfarms' undervaluation. However, investors should note that this increased stake doesn't guarantee control and the outcome of the proposed board changes remains uncertain. The cryptocurrency mining industry's volatility and regulatory challenges add complexity to this investment, making it important for investors to monitor how this increased ownership might influence Bitfarms' future operations and strategy.

Legal Expert

Riot Platforms' disclosure of its increased stake in Bitfarms aligns with Canadian securities regulations, demonstrating transparency in the market. The requisition of a special meeting to remove and replace certain Bitfarms directors signals a potential proxy contest. This move could lead to significant changes in Bitfarms' corporate governance and strategy. Investors should be aware that such contests can be lengthy and costly, potentially impacting short-term company performance. The statement that Riot may 'increase or decrease its position' or 'consider or propose' various actions introduces uncertainty about future moves. This situation may trigger regulatory scrutiny, especially regarding disclosure obligations and insider trading rules. Shareholders should closely monitor communications from both companies for updates on this evolving corporate control situation.

Tech Expert

Riot Platforms' increased stake in Bitfarms represents a significant shift in the competitive landscape of Bitcoin mining. Both companies operate large-scale mining facilities and this move could lead to potential synergies or consolidation in the industry. The timing is notable, given the recent Bitcoin halving event which has put pressure on miners' profitability. Riot's interest in reshaping Bitfarms' board suggests they may be seeking to influence operational strategies, possibly to improve efficiency or explore new technologies. This could include advancements in ASIC chip design, renewable energy integration, or heat recycling techniques. However, the cryptocurrency mining sector faces challenges such as energy consumption concerns and regulatory pressures. Investors should consider how potential collaboration or competition between these major players might impact the broader crypto mining ecosystem and its technological trajectory.

CASTLE ROCK, Colo.--(BUSINESS WIRE)-- Riot Platforms, Inc. (“Riot”) issues this press release pursuant to Part 3 of Canadian National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues and Part 5 of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids in respect of Bitfarms Ltd. (“Bitfarms” or the “Company”).

Riot announces that on August 13, 2024 it acquired ownership of 1,000,000 common shares (the “Purchased Shares”) of the Company representing approximately 0.22% of the issued and outstanding Common Shares (the “Common Shares”) of the Company (based on the information contained in the Company’s management’s discussion and analysis for the three and six months ended June 30, 2024 (the “Company’s Q2 MD&A”)).

The Purchased Shares were acquired through normal course purchases on the Nasdaq Stock Market and other open market trades for a weighted average price of approximately US$2.28 per Purchased Share (equivalent to approximately C$3.13 per Purchased Share based on the daily exchange rate posted by the Bank of Canada on August 13, 2024 (the “Exchange Rate”)) at a price range per Purchased Share of approximately US$2.20 to US$2.34 (equivalent to approximately C$3.02 to C$3.21 based on the Exchange Rate) for an aggregate amount equal to US$2,280,800.00 (equivalent to approximately C$3,129,942.84 based on the Exchange Rate).

Immediately prior to the acquisition of Common Shares giving rise to the issuance of this press release, Riot beneficially owned 84,293,054 Common Shares, representing approximately 18.68% of the issued and outstanding Common Shares (based on the information contained in the Company’s Q2 MD&A). Following completion of the aforementioned acquisition, Riot beneficially owned 85,293,054 Common Shares, representing approximately 18.90% of the issued and outstanding Common Shares as at the date hereof (based on the information contained in the Company’s Q2 MD&A).

On June 24, 2024, Riot announced that it has requisitioned a special meeting of shareholders (the “Special Meeting”) at which Riot will seek to remove certain directors from the Company’s Board of Directors (the “Bitfarms Board”) and replace them with independent director candidates.

Riot intends to review its investment in the Company on a continuing basis and depending upon various factors, including without limitation, any discussion between Riot, the Company and/or the Bitfarms Board and its advisors regarding, among other things, the requisitioned Special Meeting and/or the composition of the Bitfarms Board, the Company’s financial position and strategic direction, overall market conditions, other investment opportunities available to Riot, and the availability of securities of the Company at prices that would make the purchase or sale of such securities desirable, Riot may (i) increase or decrease its position in the Company through, among other things, the purchase or sale of securities of the Company, including through transactions involving the Common Shares and/or other equity, debt, notes, other securities, or derivative or other instruments that are based upon or relate to the value of securities of the Company in the open market or otherwise, (ii) enter into transactions that increase or hedge its economic exposure to the Common Shares without affecting its beneficial ownership of the Common Shares or (iii) consider or propose one or more of the actions described in subparagraphs (a) - (k) of Item 5 of Riot’s early warning report filed in accordance with applicable Canadian securities laws, including submitting a revised proposal to acquire the Company.

This press release is not meant to be, nor should it be construed as, an offer (or an intention to make an offer) to buy or the solicitation of an offer to sell any of the Company’s securities.

Riot will file the Early Warning Report in accordance with applicable securities laws, which will be available under the Company’s profile at www.sedarplus.ca. The head office of the Company is 110 Yonge Street, Suite 1601 Toronto, Ontario M5C 1T4. The address of Riot is 3855 Ambrosia Street, Suite 301, Castle Rock, CO 80109.

FOR MORE INFORMATION

For further information and to obtain a copy of the Early Warning Report, please see the Company’s profile on the SEDAR+ website (www.sedarplus.ca) or contact Phil McPherson, Vice President, Capital Markets & Investor Relations, at (303) 794-2000 ext. 110.

About Riot Platforms, Inc.

Riot’s (NASDAQ: RIOT) vision is to be the world’s leading Bitcoin-driven infrastructure platform. Our mission is to positively impact the sectors, networks, and communities that we touch. We believe that the combination of an innovative spirit and strong community partnership allows the Company to achieve best-in-class execution and create successful outcomes.

Riot, a Nevada corporation, is a Bitcoin mining and digital infrastructure company focused on a vertically integrated strategy. Riot has Bitcoin mining operations in central Texas and electrical switchgear engineering and fabrication operations in Denver, Colorado.

For more information, visit www.riotplatforms.com.

Cautionary Note Regarding Forward Looking Statements

Statements contained herein that are not historical facts constitute “forward-looking statements” and “forward-looking information” (together, “forward-looking statements”) within the meaning of applicable U.S. and Canadian securities laws that reflect management’s current expectations, assumptions, and estimates of future events, performance and economic conditions. Such forward-looking statements rely on the safe harbor provisions of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934 and the safe harbor provisions of applicable Canadian securities laws. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words and phrases such as “anticipate,” “believe,” “combined company,” “create,” “drive,” “expect,” “forecast,” “future,” “growth,” “intend,” “hope,” “opportunity,” “plan,” “potential,” “proposal,” “synergies,” “unlock,” “upside,” “will,” “would,” and similar words and phrases are intended to identify forward-looking statements. These forward-looking statements may include, but are not limited to, statements concerning: uncertainties as to whether the Company will enter into discussions with Riot regarding a proposed combination of Riot and the Company; the outcome of any such discussions, including the terms and conditions of any such potential combination; the future performance, liquidity and financial position of the combined company, and its ability to achieve expected synergies; and uncertainties as to timing of the Special Meeting or the outcome. Such forward-looking statements are not guarantees of future performance or actual results, and readers should not place undue reliance on any forward-looking statement as actual results may differ materially and adversely from forward-looking statements. Detailed information regarding the factors identified by the management of Riot, which they believe may cause actual results to differ materially from those expressed or implied by such forward-looking statements in this press release, may be found in Riot’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including the risks, uncertainties and other factors discussed under the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” of Riot’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 23, 2024, and the other filings Riot has made or will make with the SEC after such date, copies of which may be obtained from the SEC’s website at www.sec.gov. All forward-looking statements contained herein are made only as of the date hereof, and Riot disclaims any intention or obligation to update or revise any such forward-looking statements to reflect events or circumstances that subsequently occur, or of which Riot hereafter becomes aware, except as required by applicable law.

No Offer to Purchase or Sell Securities

This press release is for informational purposes only and is not intended to and does not constitute an offer to sell or the solicitation of an offer, or an intention to offer, to subscribe for or buy or an invitation to purchase or subscribe for any securities, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. Such an offer to purchase securities would only be made pursuant to a registration statement, prospectus, tender offer, takeover bid circular, management information circular or other regulatory filing filed by Riot with the SEC and available at www.sec.gov or filed with applicable Canadian securities regulatory authorities on SEDAR+ and available at www.sedarplus.ca.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240813543528/en/

Investor Contacts:

Phil McPherson

303-794-2000 ext. 110

IR@Riot.Inc



Okapi Partners

Bruce Goldfarb / Chuck Garske, (877) 285-5990

info@okapipartners.com



Media Contact:

Longacre Square Partners

Joe Germani / Dan Zacchei

jgermani@longacresquare.com / dzacchei@longacresquare.com

Source: Riot Platforms, Inc.

FAQ

What percentage of Bitfarms (BITF) does Riot Platforms now own?

As of August 13, 2024, Riot Platforms owns 18.9% of the issued and outstanding Common Shares of Bitfarms (BITF).

How many additional shares of Bitfarms (BITF) did Riot Platforms purchase on August 13, 2024?

Riot Platforms purchased 1,000,000 additional common shares of Bitfarms (BITF) on August 13, 2024.

What is the average price Riot Platforms paid for the newly acquired Bitfarms (BITF) shares?

Riot Platforms paid a weighted average price of approximately US$2.28 per share for the newly acquired Bitfarms (BITF) shares.

What action has Riot Platforms taken regarding Bitfarms' (BITF) Board of Directors?

Riot Platforms has requisitioned a special meeting of shareholders to seek removal of certain Bitfarms (BITF) directors and replace them with independent candidates.