Bitfarms Purchases Competitor Stronghold Digital in $175 Million Stock and Debt Transaction

Bitcoin mining enterprise Bitfarms has revealed its acquisition of competitor Stronghold Digital Mining in a deal valued at $175 million, financed through stock and debt. This transaction, which received unanimous approval from the boards of both organizations, is anticipated to finalize in the first quarter of 2025.

Acquisition of Stronghold Digital to Enhance Bitfarms’ Energy Portfolio and Growth Opportunities

As stated in an official press release, Bitfarms will obtain Stronghold via a $125 million equity deal and will take on $50 million of Stronghold’s current debt.

According to the agreement’s stipulations, Stronghold shareholders will be entitled to receive 2.52 shares of Bitfarms for every share they hold.

We are excited to announce that #Bitfarms has entered into a definitive agreement to acquire @Stronghold_DM.
Stronghold contributes to Bitfarms with vertically integrated crypto asset mining operations and access to the strategically significant PJM grid, the largest wholesale electricity… pic.twitter.com/HemcStdETS

— Bitfarms (@Bitfarms_io) August 21, 2024

“After three years of continuous discussions, I am proud to announce this transformative acquisition, which is a crucial step in ensuring a robust future for Bitfarms,” stated Ben Gagnon, CEO of Bitfarms.

The acquisition is projected to add 307 megawatts of power capacity to Bitfarms’ operations, positioning the company to elevate its total energy portfolio to over 950 megawatts by the conclusion of 2025.

Additionally, the incorporation of Stronghold’s two “tier two” merchant power plants located in Pennsylvania will further enhance Bitfarms’ energy portfolio and broaden its geographic reach.

This substantial increase in energy resources will fortify Bitfarms’ standing as a prominent entity in the North American Bitcoin mining sector.

Importantly, Stronghold shareholders are expected to hold just under 10% of the merged company upon the transaction’s completion, which signifies a 71% premium over Stronghold’s 90-day volume-weighted average price on Nasdaq as of August 16.

“This transaction represents a pivotal step in diversifying our business and generating greater long-term shareholder value,” Gagnon remarked. “By vertically integrating with power generation, enhancing energy trading capabilities, and securing high-potential sites for high-performance computing and AI, we aim to transcend traditional Bitcoin mining and position Bitfarms for sustained growth,” Gagnon added.

Bitfarms and Riot Platforms Navigate Industry Challenges through Strategic Acquisitions

Bitfarms’ acquisition occurs amid uncertainty for numerous Bitcoin miners, who have been affected by the recent fourth Bitcoin halving that diminished their revenues.

In response, various companies have been seeking methods to expand their operations, mining fleets, and geographic presence while diversifying into related sectors such as high-performance computing (HPC).

One of the largest Bitcoin miners in the U.S., Riot Platforms, has been particularly proactive in this area. The miner is actively pursuing the acquisition of Bitfarms, having already secured nearly 20% of the company’s stock and nominated three independent directors to its board.

Riot Platforms, Inc. Reports Beneficial Ownership of 18.9% in Bitfarms Ltd.
For more information, please visit: https://t.co/rUt5EroO5I.

— Riot Platforms, Inc. (@RiotPlatforms) August 13, 2024

In a strategic move that further solidifies its position in the industry, Riot recently finalized the $92.5 million acquisition of Block Mining, based in Kentucky.

This transaction, completed on July 23, involved an $18.5 million cash payment along with the issuance of $74 million in Riot common stock.

A potential earn-out of up to $32.5 million is available until 2025, contingent upon Block Mining securing additional power purchase agreements.

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