UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
| Bitfarms
Ltd. |
| (Name of Issuer) |
| |
| Common Shares |
| (Title of Class of Securities) |
| |
| 09173B107 |
| (CUSIP Number) |
|
Riot
Platforms, Inc.
3855
Ambrosia Street, Suite 301
Castle Rock, CO 80109
Telephone:
(303) 794-2000 |
|
Attention to:
William Jackman
Executive Vice President,
General Counsel and Secretary
|
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications) |
| |
| May 21, 2024 |
| (Date of Event Which Requires Filing of This Statement) |
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box. ¨
* The remainder of this cover page shall be filled out for a reporting
person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be “filed” for the purpose of section 18 of the Securities Exchange Act of 1934 (“Act”)
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
| CUSIP No. 09173B107 |
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SCHEDULE 13D
| 1 |
NAME OF REPORTING PERSON
Riot Platforms, Inc. |
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ¨
(b) ¨ |
| 3 |
SEC USE ONLY
|
| 4 |
SOURCE OF FUNDS
WC |
| 5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
|
¨ |
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada |
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH |
7 |
SOLE VOTING POWER
36,856,350 |
| 8 |
SHARED VOTING POWER
0 |
| 9 |
SOLE DISPOSITIVE POWER
36,856,350 |
| 10 |
SHARED DISPOSITIVE POWER
0 |
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
36,856,350 |
| 12 |
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: |
¨ |
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.25% |
| 14 |
TYPE OF REPORTING PERSON
CO |
| |
|
|
|
|
| CUSIP No. 09173B107 |
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SCHEDULE 13D
Item 1. Security and Issuer.
This Schedule 13D (this “Statement”)
relates to the Common Shares, no par value per share (the “Common Shares”), of Bitfarms Ltd., a corporation incorporated
under the Canada Business Corporations Act and continued under the Business Corporations Act (Ontario) (the “Company”),
whose principal executive offices are located at 110 Yonge Street, Suite 1601, Toronto, Ontario, M5C 1T4.
Item 2. Identity and Background.
(a)-(c), (f) This Statement is being filed by
Riot Platforms, Inc., a Nevada corporation (“Riot” or the “Reporting Person”), whose principal executive
offices are located at 3855 Ambrosia Street, Suite 301, Castle Rock, CO 80109. The common stock of Riot is listed for trading on the Nasdaq
Capital Market under the trading symbol “RIOT”.
Riot is a vertically integrated Bitcoin mining
company principally engaged in enhancing its capabilities to mine Bitcoin in support of the Bitcoin blockchain. Riot also provides comprehensive
and critical infrastructure for institutional-scale Bitcoin mining at its large-scale Bitcoin mining facilities in Milam County, Texas,
and Navarro County, Texas.
The information required by General Instruction
C to Schedule 13D is attached hereto as Schedule A and is hereby incorporated by reference.
(d)-(e) The Reporting Person and the individuals
listed on Schedule A have not, during the last five years, been (i) convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The information disclosed under Item 4 below is
hereby incorporated by reference into this Item 3.
The aggregate
purchase price of the Common Shares held by the Reporting Person reported herein was US$72,122,651. The Common Shares beneficially
owned by the Reporting Person were purchased using funds out of its working capital.
Item 4. Purpose of Transaction.
On April 22, 2024, the Reporting Person sent a
letter (the “First Letter”) to the board of directors of the Company (the “Board”) that set out
the Reporting Person’s non-binding proposal to acquire all of the outstanding Common Shares of the Company (the “Proposed
Transaction”) for consideration of US$2.30 per Common Share, to be paid with a combination of cash and shares of the Reporting
Person’s common stock (the “Purchase Price”). The foregoing summary of the First Letter is not intended to be
complete and is qualified in its entirety by reference to the full text of the First Letter, which is filed as Exhibit 1 hereto
and is incorporated herein by reference.
| CUSIP No. 09173B107 |
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SCHEDULE 13D
On May 28,
2024, the Reporting Person sent a letter to the Board (the “Second Letter”) reiterating the Proposed Transaction at
the Purchase Price. The Second Letter also advised the Board that the Reporting Person had acquired approximately 9.25% of the Common
Shares and indicated that the Reporting Person currently intends to requisition a special meeting of the Company’s shareholders,
at which the Reporting Person intends to nominate several well-qualified and independent directors to join the Company’s Board.
The foregoing summary of the Second Letter is not intended to be complete and is qualified in its entirety by reference to the full text
of the Second Letter, which is filed as Exhibit 2 hereto and is incorporated herein by reference.
On May 28,
2024, the Reporting Person issued a press release publicly announcing the Proposed Transaction and that the Reporting Person had acquired
approximately 9.25% of the Common Shares. The foregoing summary of the press release is not intended to be complete and is qualified in
its entirety by reference to the full text of the press release, which is filed as Exhibit 3 hereto and is incorporated herein
by reference.
Neither
the proposal, nor this Statement is meant to be, nor should be construed as, an offer to buy or the solicitation of an offer to sell any
of the Company’s securities.
The Reporting Person intends to review its investment
in the Company on a continuing basis and depending upon various factors, including without limitation, the Board’s response, if
any, to the Proposed Transaction and any discussion between the Reporting Person and the Board relating thereto, the Company’s financial
position and strategic direction, overall market conditions, other investment opportunities available to the Reporting Person, and the
availability of securities of the Company at prices that would make the purchase or sale of such securities desirable, the Reporting Person
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 their 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) - (j) of Item 4 of Schedule 13D.
If the Proposed Transaction is consummated, it
would result in, among other things, (i) the acquisition by the Reporting Person of additional securities of the Company, (ii) a change
of control of the Company, (iii) a change in the board of directors or management of the Company, (iv) the de-listing of the Common Shares
from the Nasdaq Stock Market, and (v) the de-registration of the Common Shares under the Act.
Item 5. Interest in Securities of the Issuer.
(a) and (b) The aggregate number and percentage
of the Common Shares that are beneficially owned by the Reporting Person and as to which the Reporting Person has sole voting power, shared
voting power, sole dispositive power and shared dispositive power are set forth on the cover page of this Statement, and such information
is incorporated herein by reference. The percentages used herein are calculated based on an aggregate of 398,587,000 Common Shares reported
by the Company to be outstanding as of May 14, 2024 in its Management’s Discussion and Analysis for the three months ended March
31, 2024, filed as Exhibit 99.2 to the Company’s Report of Foreign Private Issuer filed on Form 6-K on May 15, 2024.
| CUSIP No. 09173B107 |
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SCHEDULE 13D
(c) Information concerning the Common Shares purchased
by (or on behalf of) the Reporting Person during the 60-day period prior to this filing is set forth in Schedule B hereto and is
incorporated herein by reference.
(d) No person other than the Reporting Person
is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common
Shares beneficially owned by the Reporting Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
Not applicable.
| CUSIP No. 09173B107 |
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SCHEDULE 13D
Item 7. Material to Be Filed as Exhibits.
| CUSIP No. 09173B107 |
Page 7 of 7 |
SCHEDULE 13D
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, the undersigned certifies that the information set forth in this Statement is true, complete and correct.
Dated: May 28, 2024
| |
Riot Platforms, Inc. |
| |
|
| |
By: |
/s/ Colin Yee |
| |
|
Name: |
Colin Yee |
| |
|
Title: |
Chief Financial Officer |
SCHEDULE A
Directors and Executive Officers
of the Reporting Person
The following table sets forth certain
information with respect to the directors and executive officers of the Reporting Person. Unless otherwise specified below, the business
address and address of the organization of principal occupation or employment of each director and executive officer of the Reporting
Person is 3855 Ambrosia Street, Suite 301 Castle Rock, CO, USA 80109.
| Name |
Position |
Citizenship |
| Benjamin Yi |
Director and Executive Chairman |
Canada |
| Jason Les |
Director and Chief Executive Officer |
United States |
| Hubert Marleau |
Director |
Canada |
| Hannah Cho |
Director |
United States |
| Lance D’Ambrosio |
Director |
United States |
| Colin Yee |
Executive Vice President, Chief Financial Officer |
Canada |
| William Jackman |
Executive Vice President, General Counsel and Secretary |
Canada |
| Jason Chung |
Executive Vice President, Head of Corporate Development & Strategy |
Canada |
| Ryan Werner |
Senior Vice President, Chief Accounting Officer |
United States |
SCHEDULE B
Transactions in Common Shares
by the Reporting Person
The table below specifies the date, amount,
weighted average price and price range of the Common Shares purchased by (or on behalf of) the Reporting Person during the 60-day period
prior to this filing, all of which were purchased in the open market. The Common Shares were purchased in multiple transactions at prices
within the ranges indicated in the Price Range column. The Reporting Person undertakes to provide to the staff of the Securities and Exchange
Commission, upon request, full information regarding the number of Common Shares purchased at each separate price.
| Trade Date | |
Shares Purchased | |
Weighted Average Price
per Share (US$) | |
Price Range (US$) |
| 3/28/2024 | |
153,692 | |
2.24 | |
2.23 – 2.25 |
| 4/01/2024 | |
825,000 | |
2.28 | |
2.23 – 2.32 |
| 4/02/2024 | |
2,100,000 | |
2.17 | |
2.12 – 2.19 |
| 4/03/2024 | |
1,462,848 | |
2.23 | |
2.17 – 2.25 |
| 4/16/2024 | |
1,550,000 | |
1.73 | |
1.72 – 1.75 |
| 4/17/2024 | |
1,750,000 | |
1.76 | |
1.72 – 1.82 |
| 4/18/2024 | |
2,207,398 | |
1.91 | |
1.80 – 1.96 |
| 4/19/2024 | |
2,200,000 | |
1.92 | |
1.88 – 1.97 |
| 4/22/2024 | |
2,600,000 | |
2.00 | |
1.91 – 2.07 |
| 4/23/2024 | |
268,946 | |
2.10 | |
2.06 – 2.12 |
| 4/26/2024 | |
120,824 | |
1.95 | |
1.94 – 1.96 |
| 4/29/2024 | |
879,176 | |
1.92 | |
1.88 – 1.95 |
| 5/15/2024 | |
1,438,529 | |
1.77 | |
1.66 – 1.86 |
| 5/16/2024 | |
1,200,000 | |
1.80 | |
1.75 – 1.84 |
| 5/17/2024 | |
767,490 | |
1.79 | |
1.75 – 1.85 |
| 5/21/2024 | |
6,229,769 | |
1.87 | |
1.82 – 1.92 |
| 5/22/2024 | |
6,505,000 | |
2.03 | |
1.86 – 2.11 |
| 5/23/2024 | |
3,997,678 | |
2.02 | |
1.95 – 2.10 |
| 5/24/2024 | |
600,000 | |
2.05 | |
1.95 – 2.11 |
Exhibit 1
April 22, 2024
BY EMAIL
Board of Directors
Bitfarms Ltd.
110 Yonge Street, Suite 1601
Toronto, ON M5C 1T4
Attention:
Nicolas Bonta, Chairman of the Board
Brian Howlett, Lead Independent Director
Dear Nicolas and Brian:
We at Riot Platforms Inc.
(“Riot”) have long known and admired Bitfarms Ltd. (“Bitfarms”) and your successful development of a vertically-integrated
platform comprised of geographically diverse sites predominantly powered by environmentally-friendly hydroelectric energy. As we have
discussed in the past, we firmly believe that a combination of Bitfarms and Riot would create the premier, and largest, publicly-listed
Bitcoin miner globally, with 52 EH/s of self-mining capacity by the end of 2024 and geographically diversified operations well positioned
for long-term growth. We are confident that a combination of our two companies would generate significant benefits for stockholders of
both Bitfarms and Riot, and are pleased to deliver this confidential non-binding proposal affirming our interest in a potential transaction
(a “Transaction”).
Riot’s vision is to
be the world’s leading Bitcoin-driven infrastructure platform. Our industry leading vertically-integrated approach to mining is
demonstrated by the 700 MW of operating capacity at our Rockdale Facility, believed to be the largest Bitcoin mining facility in North
America, and our recently energized Corsicana Facility which will have one gigawatt of total capacity when fully developed. We are strong
believers in the vertically-integrated business model for Bitcoin mining and believe that Bitfarms’s strategy aligns well with ours.
Therefore, we are pleased
to submit this non-binding proposal to acquire 100% of the equity interests of Bitfarms at a price of US$2.30 for each outstanding Bitfarms
common share. This represents a premium of 20% to the closing share price of Bitfarms on April 19, 2024. The consideration delivered to
Bitfarms shareholders will be a mix of cash and Riot common stock that would result in Bitfarms shareholders owning no more than 17% of
the outstanding common stock of the combined company upon consummation of a Transaction. A Transaction will not require Riot stockholder
approval and there will be no financing contingency for the cash portion of the purchase price.
We believe that our
proposal offers compelling value for Bitfarms shareholders, with a significant premium above Bitfarms’s current share price
and the opportunity to receive Riot common stock and participate in the success of what will become the largest publicly-listed
Bitcoin miner. Given our successful experience in executing strategic transactions, particularly evidenced by our acquisition of
Whinstone US, Inc. in 2021, we are extremely confident that a Transaction with Riot will maximize speed and certainty of a
successful closing for Bitfarms shareholders.
Our plan is for Bitfarms to
operate as Riot’s international expansion arm and for our respective management teams to work together to aggressively pursue expansion
and increase economies of scale across our combined sites. Bitfarms would also benefit from Riot’s unmatched balance sheet strength,
with de minimis corporate debt, US$685 million in cash on hand and 8,490 unencumbered Bitcoin as of March 31, 2024, and significant
access to public equity markets, all of which will enable Riot to fully finance Bitfarms’s current and future growth plans.
The proposed Transaction is
our highest strategic priority and has the full support of our entire Board of Directors. Together with our advisors at Citi and Paul
Weiss, we have invested considerable time in the preparation of this proposal based on publicly available information. We would, however,
expect to have a limited period of customary due diligence with access to appropriate information and your management team to confirm
our understanding of Bitfarms. We are prepared to sign a mutually agreeable non-disclosure agreement to enter into these diligence discussions
expeditiously, in parallel with which we would also negotiate and finalize definitive transaction agreements.
This letter contains a non-binding
offer and is not intended to be legally binding, to constitute an offer capable of acceptance or to grant or impose any rights, obligations,
or liability on any part. The final terms and conditions of a Transaction would be subject to the approval of our respective Boards of
Directors and the finalization of mutually acceptable transaction agreements. The existence of this letter and its contents are to be
held in the strictest confidence by each party and may not be disclosed to anyone other than to key representatives of each party that
need to know such existence and contents in connection with a Transaction.
On behalf of our Board of
Directors and management team, we would like to reiterate our commitment to the successful combination of our two organizations. We look
forward to hearing your response to this proposal and look forward to working with you to create the world’s leading Bitcoin mining
company.
Yours sincerely,
| /s/ Benjamin Yi |
|
/s/ Jason Les |
| Benjamin Yi, Executive Chairman |
|
Jason Les, Chief Executive Officer |
Exhibit 2
| | Riot
Platforms, Inc.
3855
Ambrosia Street, Suite 301
Castle
Rock, CO 80109 |
May 28, 2024
Board of Directors
Bitfarms Ltd.
110 Yonge Street, Suite 1601
Toronto, ON M5C 1T4
Dear Directors:
We were surprised by your
swift rejection of our April 22nd proposal without the benefit of a thorough and informed evaluation. Further, we are
disappointed that we have not been able to engage with you in any meaningful way regarding the strategic and financial
merits of combining our two companies given the historic opportunity this would afford Bitfarms’ shareholders. Based on the serious
governance questions raised below, we believe that the confidentiality agreement that you demanded we execute – which originally
included a standstill of more than three years – was designed to give the Bitfarms Board complete control over whether our proposal
was properly considered irrespective of the best interests of Bitfarms’ shareholders.
As you know, this is not the
first time we have expressed an interest in discussing a potential combination with you, and after repeated attempts to do so have not
progressed, we have decided to publicly disclose our proposal. Bitfarms’ shareholders should have the opportunity to decide if they prefer
the substantial premium and high degree of certainty offered by our proposal, or if they would rather continue to accept the significant
risk that Bitfarms can realize its full potential for shareholders through the execution of its strategic plan given Bitfarms’ problematic
governance structure and the Board’s recent concerning actions.
Moreover, as the single largest
shareholder of Bitfarms, with ownership of 9.25% of Bitfarms’ common shares, we are deeply concerned that the founders on Bitfarms’
Board – Nicolas Bonta and Emiliano Grodzki – may be entrenching themselves rather than acting in the best interests of all
Bitfarms’ shareholders. These concerns have only been heightened by the abrupt termination of the Bitfarms CEO without a transition plan
in place during a critical period of execution for Bitfarms and the industry, as well as the allegations, if accurate, made against certain
members of Bitfarms’ Board by the ex-CEO in his lawsuit. In light of our serious governance concerns, we currently intend to requisition
a special meeting of Bitfarms’ shareholders, at which we would nominate several well-qualified and independent directors to join the Bitfarms
Board.
As we have transparently discussed
in the past, we firmly believe that a combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with
a combined pro forma 19.6 EH/s of current self-mining capacity, 52 EH/s of self-mining capacity forecasted by year-end, a stronger financial
position to support Bitfarms’ growth plans and unmatched geographically diversified operations. We are confident that a combination
of our two companies would generate significant benefits for stakeholders of both Bitfarms and Riot.
We reiterate our
original proposal to acquire 100% of Bitfarms’ common shares at a price of US$2.30 per share. This represents a premium of 24%
to Bitfarms’ one-month volume-weighted average share price as of May 24, 2024. The consideration offered to Bitfarms’
shareholders under the proposal will consist of a mix of cash and Riot common stock that would result in Bitfarms’
shareholders owning up to approximately 17% of the outstanding common stock of the combined company upon consummation of a merger
between Bitfarms and Riot. The proposed transaction will not require Riot shareholder approval and there will be no financing
contingency for the cash portion of the purchase price.
We believe that our proposal
offers compelling value for Bitfarms’ shareholders, with a significant premium above Bitfarms’ recent share price. The opportunity
to receive Riot common stock will allow Bitfarms’ shareholders to participate in the significant upside potential of what will become
the largest publicly listed Bitcoin miner. Given our successful experience in executing strategic transactions, particularly evidenced
by our acquisition of Whinstone US, Inc. in 2021, we are extremely confident that a transaction with Riot will be in the best interests
of all of Bitfarms’ shareholders.
| | Riot
Platforms, Inc.
3855
Ambrosia Street, Suite 301
Castle
Rock, CO 80109 |
Riot’s vision is to
be the world’s leading Bitcoin-driven infrastructure platform. Our industry-leading, vertically-integrated approach to mining is
demonstrated by the 700 MW of operating capacity at our Rockdale Facility, believed to be the largest Bitcoin mining facility in North
America, and our recently energized Corsicana Facility, which will have one gigawatt of total capacity when fully developed. We are strong
believers in the vertically-integrated business model for Bitcoin mining and believe that Bitfarms’ strategy aligns well with ours.
Our plan is for Bitfarms to
operate as Riot’s international expansion arm and for Bitfarms’ well-respected management team to stay on and work together
with us to aggressively pursue expansion and increase economies of scale across our combined sites. Bitfarms would also benefit from Riot’s balance sheet strength, with de minimis corporate debt, more than US$700 million in cash on hand and 8,872 unencumbered
Bitcoin as of April 30, 2024, and significant access to public equity markets, all of which will enable Riot to fully finance Bitfarms’ growth plans.
The proposed transaction is
our highest strategic priority and has the full support of our entire Board of Directors. Together with our advisors, we have invested
considerable time in the preparation of this proposal based on publicly available information.
This letter constitutes a
non-binding proposal and is not intended to be legally binding, to constitute an offer capable of acceptance or to grant or impose any rights,
obligations, or liability on any part. The final terms and conditions of a transaction would be subject to the approval of our respective
Boards of Directors and the finalization of mutually acceptable arrangement and support agreements.
On behalf of our Board of
Directors and management team, we would like to reiterate our commitment to the successful combination of our two organizations. We look
forward to hearing your response and to working with your shareholders to create the world’s leading Bitcoin mining company.
Yours sincerely,
| /s/ Benjamin Yi |
|
/s/ Jason Les |
| Benjamin Yi, Executive Chairman |
|
Jason Les, Chief Executive Officer |
Exhibit 3
Riot Proposes to Acquire Bitfarms for US$2.30
Per Share to Create the World’s Largest Publicly Listed Bitcoin Miner
Proposal Would Deliver Shareholders Substantial
Value, Reflecting a 24% Premium to Bitfarms’ One-Month Volume Weighted Average Price
Combination Would Enhance Bitfarms’
Financial Profile, Enabling Investments in Future Growth and Providing a Compelling Opportunity to Participate in Significant Upside of
the Combined Company
Riot Has Acquired a 9.25% Stake to Become
Bitfarms’ Largest Shareholder; Intends to Requisition a Special Meeting of Bitfarms’ Shareholders to Add New Independent Directors
to Bitfarms’ Board
CASTLE ROCK, Colo., May 28, 2024 –
Riot Platforms, Inc. (NASDAQ: RIOT) (“Riot” or the “Company”) today announced that it has made a proposal
to the Bitfarms Board of Directors (the “Bitfarms Board”) to acquire all of the outstanding shares of Bitfarms Ltd. (NASDAQ/TSX:
BITF) (“Bitfarms”) at a price of US$2.30 per Bitfarms common share (the “Proposal”). Riot also announced that
it has accumulated a 9.25% stake in Bitfarms to become Bitfarms’ largest shareholder.
The Proposal represents a 24% premium to Bitfarms’
one-month volume-weighted average share price as of May 24, 2024. Further, it represents a 20% premium to Bitfarms’ share price
on April 19, 2024, the last day of trading prior to Riot’s initial proposal to the Bitfarms Board. The Proposal represents
approximately US$950 million in total equity value.
The consideration offered to Bitfarms’ shareholders
under the Proposal consists of cash and Riot common stock and would result in Bitfarms’ shareholders owning up to approximately
17% of the combined company. This cash and stock Proposal would provide Bitfarms’ shareholders with a substantial premium and immediate
cash value, as well as significant potential for future value creation through participation in a financially and commercially stronger
company with a well-defined strategy, led by an established and proven management team.
The Proposal was originally delivered privately
to the Bitfarms Board on April 22, 2024. However, the Bitfarms Board rejected it without engaging in substantive dialogue with Riot.
Moreover, new allegations in a lawsuit brought by Bitfarms’ recently terminated CEO, if accurate, raise serious questions about
whether certain directors are committed to acting in the best interests of all shareholders. As a result, Riot believes it is necessary to
disclose its Proposal directly to Bitfarms’ shareholders. Following Bitfarms’ Annual General and Special Meeting, scheduled
for May 31, 2024, Riot intends to requisition a Special Meeting of Bitfarms’ shareholders to add new, well-qualified and independent
directors to the Bitfarms Board.
Riot and Bitfarms Together: Compelling
Strategic Rationale
The proposed combination is compelling for shareholders
of both companies, as it would:
| ● | Create the premier and largest Bitcoin miner
globally: The transaction would create a vertically-integrated Bitcoin mining company with approximately 1 GW of current power capacity
and 19.6 EH/s of current self-mining capacity, with up to 1.5 GW of power capacity and 52 EH/s of self-mining capacity by year-end, a scale that
Riot believes will be substantially larger than any other publicly listed Bitcoin mining company globally. Bitfarms’ vertically-integrated business
model aligns well with Riot’s, and Riot is confident that a combined company will drive further strategic and financial benefits
to both sets of shareholders. |
| ● | Provide geographic diversification of
sites well-positioned for expansion and long-term growth: The combined company would have 15 facilities across the United
States, Canada, Paraguay and Argentina, with up to 2.2 GW of total power capacity when fully developed. The global capabilities and geographic diversity of the
combined sites will be highly differentiated and the Company believes this would allow for continued expansion into operating
environments with favorable energy arrangements. |
| ● | Utilize Riot’s strong financial profile
to drive future growth: Bitfarms will benefit from Riot’s strong balance sheet, with de minimis corporate debt, and more
than US$700 million in cash on hand and 8,872 unencumbered Bitcoin as of April 30, 2024 – both approximately 10 times greater
than that held by Bitfarms, enabling Riot to fully finance Bitfarms’ growth plans. Riot is also confident that
the financial profile of the combined company will unlock for Bitfarms the access to public equity markets that Riot benefits from today. |
Benjamin Yi, Executive Chairman of Riot,
said, “A combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with
geographically diversified operations well-positioned for long-term growth. We were disappointed to learn that the Bitfarms Board
rejected our compelling Proposal without engaging in substantive dialogue with us. While we have long respected Bitfarms’
business and management team, we are confident that Bitfarms’ shareholders will agree that this Proposal represents a
significantly more attractive alternative for Bitfarms than its standalone trajectory.”
Jason Les, Chief Executive Officer of Riot,
added, “We are deeply concerned that the founders on the Bitfarms Board – Nicolas Bonta and Emiliano Grodzki – may
not be acting in the best interests of all Bitfarms shareholders. The abrupt termination of the Bitfarms CEO without a transition
plan in place at a critical period of execution for Bitfarms and the industry, as well as the allegations, if accurate, regarding
the actions of certain members of the Bitfarms Board set out in the lawsuit filed by that recently terminated CEO, raise serious
governance questions. This is why we intend to call a Special Meeting to give shareholders a chance to bring needed change to the
Bitfarms Board and make repairing Bitfarms’ broken corporate governance and maximizing value for all Bitfarms’ shareholders their top priorities.”
The Proposal to acquire Bitfarms has been unanimously
approved by the Board of Directors of Riot. While the Proposal is non-binding and subject to customary conditions (including entering
into a definitive transaction agreement), any transaction would not be subject to a financing condition nor require a Riot shareholder
vote. There can be no assurance that a transaction between Riot and Bitfarms will be consummated.
Citi is serving as financial advisor and Paul,
Weiss, Rifkind, Wharton & Garrison LLP and Davies Ward Phillips & Vineberg LLP are serving as legal advisors to Riot
in connection with the proposed transaction.
The full text of the letter sent to Bitfarms’
Board today is below:
***
May 28, 2024
Board of Directors
Bitfarms Ltd.
110 Yonge Street, Suite 1601
Toronto, ON M5C 1T4
Dear Directors:
We were surprised by your
swift rejection of our April 22nd proposal without the benefit of a thorough and informed evaluation. Further, we are
disappointed that we have not been able to engage with you in any meaningful way regarding the strategic and financial
merits of combining our two companies given the historic opportunity this would afford Bitfarms’ shareholders. Based on the serious
governance questions raised below, we believe that the confidentiality agreement that you demanded we execute – which originally
included a standstill of more than three years – was designed to give the Bitfarms Board complete control over whether our proposal
was properly considered irrespective of the best interests of Bitfarms’ shareholders.
As you know, this is not the
first time we have expressed an interest in discussing a potential combination with you, and after repeated attempts to do so have not
progressed, we have decided to publicly disclose our proposal. Bitfarms’ shareholders should have the opportunity to decide if they prefer
the substantial premium and high degree of certainty offered by our proposal, or if they would rather continue to accept the significant
risk that Bitfarms can realize its full potential for shareholders through the execution of its strategic plan given Bitfarms’ problematic
governance structure and the Board’s recent concerning actions.
Moreover, as the single largest
shareholder of Bitfarms, with ownership of 9.25% of Bitfarms’ common shares, we are deeply concerned that the founders on Bitfarms’
Board – Nicolas Bonta and Emiliano Grodzki – may be entrenching themselves rather than acting in the best interests of all
Bitfarms’ shareholders. These concerns have only been heightened by the abrupt termination of the Bitfarms CEO without a transition plan
in place during a critical period of execution for Bitfarms and the industry, as well as the allegations, if accurate, made against certain
members of Bitfarms’ Board by the ex-CEO in his lawsuit. In light of our serious governance concerns, we currently intend to requisition
a special meeting of Bitfarms’ shareholders, at which we would nominate several well-qualified and independent directors to join the Bitfarms
Board.
As we have transparently
discussed in the past, we firmly believe that a combination of Bitfarms and Riot would create the premier and largest publicly
listed Bitcoin miner globally, with a combined pro forma 19.6 EH/s of current self-mining capacity, 52 EH/s of self-mining capacity
forecasted by year-end, a stronger financial position to support Bitfarms’ growth plans and unmatched geographically
diversified operations. We are confident that a combination of our two companies would generate significant benefits for
stakeholders of both Bitfarms and Riot.
We reiterate our
original proposal to acquire 100% of Bitfarms’ common shares at a price of US$2.30 per share. This represents a premium of 24%
to Bitfarms’ one-month volume-weighted average share price as of May 24, 2024. The consideration offered to Bitfarms’
shareholders under the proposal will consist of a mix of cash and Riot common stock that would result in Bitfarms’
shareholders owning up to approximately 17% of the outstanding common stock of the combined company upon consummation of a merger
between Bitfarms and Riot. The proposed transaction will not require Riot shareholder approval and there will be no financing
contingency for the cash portion of the purchase price.
We believe that our proposal
offers compelling value for Bitfarms’ shareholders, with a significant premium above Bitfarms’ recent share price. The opportunity
to receive Riot common stock will allow Bitfarms’ shareholders to participate in the significant upside potential of what will become
the largest publicly listed Bitcoin miner. Given our successful experience in executing strategic transactions, particularly evidenced
by our acquisition of Whinstone US, Inc. in 2021, we are extremely confident that a transaction with Riot will be in the best interests
of all of Bitfarms’ shareholders.
Riot’s vision is to
be the world’s leading Bitcoin-driven infrastructure platform. Our industry-leading, vertically-integrated approach to mining is
demonstrated by the 700 MW of operating capacity at our Rockdale Facility, believed to be the largest Bitcoin mining facility in North
America, and our recently energized Corsicana Facility, which will have one gigawatt of total capacity when fully developed. We are strong
believers in the vertically-integrated business model for Bitcoin mining and believe that Bitfarms’ strategy aligns well with ours.
Our plan is for Bitfarms to
operate as Riot’s international expansion arm and for Bitfarms’ well-respected management team to stay on and work together
with us to aggressively pursue expansion and increase economies of scale across our combined sites. Bitfarms would also benefit from Riot’s balance sheet strength, with de minimis corporate debt, more than US$700 million in cash on hand and 8,872 unencumbered
Bitcoin as of April 30, 2024, and significant access to public equity markets, all of which will enable Riot to fully finance Bitfarms’ growth plans.
The proposed transaction is
our highest strategic priority and has the full support of our entire Board of Directors. Together with our advisors, we have invested
considerable time in the preparation of this proposal based on publicly available information.
This letter constitutes
a non-binding proposal and is not intended to be legally binding, to constitute an offer capable of acceptance or to grant or impose
any rights, obligations, or liability on any part. The final terms and conditions of a transaction would be subject to the approval
of our respective Boards of Directors and the finalization of mutually acceptable arrangement and support agreements.
On behalf of our Board of
Directors and management team, we would like to reiterate our commitment to the successful combination of our two organizations. We look
forward to hearing your response and to working with your shareholders to create the world’s leading Bitcoin mining company.
Yours sincerely,
| Benjamin Yi, Executive Chairman |
Jason Les, Chief Executive Officer |
***
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 is a Bitcoin mining and digital infrastructure
company focused on a vertically integrated strategy. The Company has Bitcoin mining operations in central Texas and electrical switchgear
engineering and fabrication operations in Denver, Colorado.
For more information, visit www.riotplatforms.com.
Non-Binding
Proposal
Riot
cautions Riot shareholders, Bitfarms shareholders and others considering trading in Riot securities or Bitfarms securities that the
Proposal referred to in this press release is non-binding, does not constitute and should not be construed as an offer or intention
to make an offer directly to Bitfarms shareholders, and there can be no assurance that any definitive offer will be made by Riot,
that Bitfarms will accept any offer made by Riot, that any agreement will be entered into by Riot and Bitfarms or that the Proposal
or any other transaction will be approved or consummated. Riot does not undertake any obligation to provide any updates with respect
to the proposed transaction, except as required by applicable law.
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 any definitive
offer will be made by Riot or Bitfarms will accept any offer made by Riot; whether Bitfarms will enter into discussions with Riot regarding
the proposed combination of Riot and Bitfarms; the outcome of any such discussions, including the possibility that the terms of
any such combination will be materially different from those described herein; the conditions to the completion of any combination, including
the receipt of Bitfarms shareholder approval and the receipt of all required regulatory approvals; the future performance, results of
operations, liquidity and financial position of each of Riot, Bitfarms and the company resulting from the combination of Riot and Bitfarms;
the possibility that the combined company may be unable to achieve expected synergies and operating efficiencies within the expected
timeframes or at all; the integration of Bitfarms’ operations with those of Riot and the possibility that such integration may
be more difficult, time-consuming and costly than expected or that operating costs and business disruption may be greater than expected
in connection with the proposed transaction. 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 or Solicitation
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. This press release is not intended to, and
does not, solicit a proxy from any shareholder of Bitfarms. Such a solicitation of proxies would only be made pursuant to a proxy
circular filed with applicable Canadian securities regulatory authorities on SEDAR+ and available at www.sedarplus.ca or pursuant to
an exemption from the proxy solicitation rules under applicable Canadian securities law.
Important Information
for Investors
This communication relates
to a proposal that Riot has made for a business combination transaction with Bitfarms. In furtherance of this proposal and subject to
future developments, Riot (and, if applicable, Bitfarms) may file one or more registration statements, prospectuses, management information
circulars, proxy statements, proxy circulars, tender offers, takeover bid circulars or other documents with the SEC and applicable Canadian
securities regulatory authorities. This communication is not a substitute for any registration statement, prospectus, management information
circular, proxy statement, proxy circular, tender offer, takeover bid circular or other document (collectively, “Regulatory Filings”)
Riot and/or Bitfarms may file with the SEC and/or applicable Canadian securities regulatory authorities in connection with the proposed
transaction. INVESTORS AND SECURITY HOLDERS OF RIOT AND BITFARMS ARE URGED TO READ EACH REGULATORY
FILING WHEN AND IF FILED BY RIOT AND/OR BITFARMS WITH THE SEC AND/OR APPLICABLE CANADIAN SECURITIES REGULATORY AUTHORITIES CAREFULLY IN
THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RIOT, BITFARMS, THE PROPOSED TRANSACTION
AND RELATED MATTERS. Any proxy circular, takeover bid circular, management information circular, prospectus or other applicable Regulatory
Filing (if and when filed) will be mailed to shareholders of Bitfarms (if and when required to be mailed by applicable law). Investors
and security holders will be able to obtain free copies of Regulatory Filings (if and when available) and other documents filed by Riot
with the SEC and available at www.sec.gov, and on the “Investor Relations” page of Riot’s corporate website, www.Riotplatforms.com.
Investors and security holders will be able to obtain free copies of any documents filed with applicable Canadian securities regulatory
authorities by Riot on SEDAR+ at www.sedarplus.ca, and on the “Investor Relations” page of Riot’s corporate website,
www.Riotplatforms.com.
This communication is
neither a solicitation of a proxy nor a substitute for any proxy statement or other filings that may be made with the SEC or Canadian
securities regulatory authorities. Nonetheless, Riot and its directors and executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. You can find information about
Riot’s executive officers and directors in Riot’s Annual Report on Form 10-K for the year ended December 31,
2023. Additional information regarding the interests of such potential participants will be included in one or more Regulatory Filings
filed with the SEC and Canadian securities regulatory authorities if and when they become available. These documents (if and when available)
may be obtained free of charge from the SEC’s website at www.sec.gov, on SEDAR+ at
www.sedarplus.ca and by visiting the “Investor Relations” page of Riot’s
corporate website, www.Riotplatforms.com.
Contacts
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
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