Toronto-based Bitcoin mining company Bitfarms has shaken up its board as co-founder and chairman Nicolas Bonta, who has been the target of an activist investor campaign, stepped down from his post.
Following the adoption of the new poison pill, Riot raised its stake in Bitfarms to 16.9 percent.
In his place, Bitfarms has appointed CEO Ben Gagnon to the board and lead director Brian Howlett as chairman. Gagnon took over the CEO role from Bonta last month, as the company continued a months-long saga with activist investor, Colorado-based bitcoin mining company Riot Platforms.
Riot has been looking to oust Bitfarms’ leadership, including Bonta and install its own. It has steadily increased its stake in Bitfarms since the company rebuffed its $950-million USD takeover bid in April.
Bitfarms was recently forced to adopt a new ‘poison pill’ strategy after the Ontario Capital Markets Tribunal struck down its first poison pill a few weeks ago. Dubbed a “shareholders’ rights plan” by Bitfarms, the new poison pill will issue new shares to dilute its stake when “creeping bids” accumulate more than 20 percent of Bitfarms common shares. While Bitfarms said it is currently not aware of any active takeover bids, it said it is aware that Riot is attempting to replace three of its directors.
RELATED: Bitfarms appoints Ben Gagnon as CEO amidst activist threats from Riot Platforms
Riot had raised its stake in Bitfarms to 14 percent in June, while the initial poison pill triggered at 15 percent. Following the adoption of the new poison pill, Riot again raised its stake in Bitfarms to 16.9 percent.
UPDATE (08/14/2024): Riot has now increased its stake in Bitfarms to 18.9 percent.
The boardroom drama began when Bitfarms’ previous CEO, president, and director, L. Geoffrey Morphy, filed a $27-million lawsuit against Bitfarms in the Superior Court of Ontario, claiming breach of contract, wrongful dismissal, and aggravated and punitive damages. A few weeks later, Riot publicly disclosed the rejected takeover bid and publicly questioned Bitfarms’ governance.
Bitfarms later responded to Riot’s critique, saying a special committee of its board determined that Riot “significantly undervalues [Bitfarms] and its growth prospects,” and that it is reviewing “strategic alternatives to ensure it achieves maximum shareholder value.”
Founded in 2017, Bitfarms owns and operates bitcoin mining farms and provides computing power to cryptocurrency networks. Bitcoin mining is how transactions are officially entered on the blockchain and new bitcoins are launched into circulation. It is an intensive process that requires significant computing power and energy use.
The company trades on the Toronto Stock Exchange and the Nasdaq under the symbol “BITF.”
Feature image courtesy Michael Fousert via Unsplash.