Bitcoin miner Bitfarms to acquire rival Stronghold Digital

Cryptocurrency mining giant Bitfarms has entered into a definitive merger agreement to acquire Stronghold in a stock-for-stock transaction.

Canadian crypto mining company Bitfarms is set to acquire U.S.-based rival Stronghold Digital in a transaction valued at approximately $175 million, including $125 million in equity value and $50 million in assumed debt.

Bitfarms said in a press release dated August 21 that the Stronghold acquisition would bring significant assets, including 4.0 EH/s hashrate and 165 MW of power capacity by June 2024. The company owns more than 750 acres of land and two power plants in Pennsylvania.

Despite the news, Bitfarms shares (BITF) fell 7.2% to $2.19 in pre-market trading, according to Nasdaq data.

The merger is expected to expand Bitfarms’ energy portfolio, taking its capacity to over 950 MW by the end of 2025, with potential future expansions taking total capacity to 1.6 GW. Describing the acquisition as a transformative step, Bitfarms CEO Ben Gagnon said the company expects “visibility into multi-year capacity expansion of approximately 66% in the U.S., up from approximately 6% today to 1.6 GW.”

“By vertically integrating with power generation, expanding our energy trading capabilities, and securing two high-potential sites with significant multi-year expansion potential for HPC/AI, we are executing on our diversification strategy to create greater long-term shareholder value beyond Bitcoin mining.”

Ben Gagnon, Bitfarms CEO

Bitfarms expands portfolio amid takeover attempts

Bitfarms said the merger, which was unanimously approved by the boards of directors of both companies, is expected to be completed in the first quarter of next year, pending shareholder and regulatory approvals.

Under the deal, Stronghold shareholders will receive 2.52 Bitfarms shares for every share they own, the press release states. That’s a 71% premium to Stronghold’s 90-day volume-weighted average price on the Nasdaq as of Aug. 16. The combined company is expected to realize $10 million in annual post-merger cost synergies.

The merger announcement comes as Bitfarms faces a takeover attempt by rival Bitcoin mining company Riot Platforms. As Crypto.news previously reported, Riot bought 1 million common shares of Bitfarms, taking its stake to around 18.9%. The move follows Riot’s $950 million takeover offer earlier this year, which was withdrawn after Bitfarms’ board of directors failed to gain traction.