Bitfarms to Acquire Rival Bitcoin Miner for $125M

Bitcoin mining firm Bitfarms has announced its acquisition of Stronghold Digital Mining, another Bitcoin mining company, in a deal worth approximately $125 million, which includes about $50 million in assumed debt.

We are pleased to announce that #Bitfarms has entered into a definitive agreement to acquire @Stronghold_DM.

Stronghold brings to Bitfarms vertically integrated crypto asset mining operations and access to the strategically desirable PJM grid, the largest wholesale electricity… pic.twitter.com/HemcStdETS

— Bitfarms (@Bitfarms_io) August 21, 2024

This move will significantly boost Bitfarms’ power capacity by up to 307 megawatts, expanding its total energy portfolio to over 950 megawatts by the end of 2025. Bitfarms’ CEO Ben Gagnon emphasized the importance of the deal, stating:

“After three years of discussions, this transformative acquisition is a crucial step towards securing a strong future for Bitfarms.”

Acquisition Terms and Expansion Plans

As part of the agreement, Stronghold shareholders will receive 2.52 Bitfarms shares for each Stronghold share they own, translating to $6.02 per share. This represents a 71% premium over Stronghold’s 90-day average share price on Nasdaq as of August 16.

Gagnon also outlined the expected benefits of the acquisition, noting that Bitfarms plans to expand its energy capacity to 950 megawatts, with nearly 50% based in the US by 2025. The company also projects growing its total capacity to 1.6 gigawatts, with approximately 66% located in the US, up from 6% currently.

Revenue Increase and Sale Efforts

For Q1 2024, Stronghold reported revenues of $27.5 million, reflecting a 27% increase from the previous quarter and a 59% year-over-year rise. This includes $26.7 million from cryptocurrency operations, $700,000 from energy sales, and $100,000 from other sources. This revenue growth underscores the company’s financial stability amid its sales efforts.

Following the acquisition, Stronghold shareholders are expected to hold just under 10% of the combined entity. Bitfarms plans to leverage this acquisition to boost its energy trading capabilities and diversify into high-performance computing and AI, aiming to create long-term value beyond Bitcoin mining.

In related news, Riot Platforms, another Bitcoin mining firm, has acquired 1 million common shares of Bitfarms, boosting its stake in the Canadian company to approximately 18.9%. The shares were purchased at a weighted average price of $2.28 each, totaling about $2.3 million. In June, Riot suspended plans to acquire Bitfarms and opted for a stake in the mining firm.