Mining company Bitfarms has responded to Riot Platforms’ open letter to shareholders criticizing its recent board of directors changes and characterizing its corporate governance as “broken.”

Bitfarms’  response  began by claiming that the upcoming special shareholder meeting, scheduled for Oct. 29, 2024, has nothing to do with corporate governance, as Riot Platforms had claimed. Instead, Bitfarms argued that Riot Platforms had suggested the proposed changes to its corporate board to further its own interests.

Bitfarms also asserted that recent changes to its board and management team were decisions the company made independent of Riot Platforms.

Bitfarms responds to Riot Platforms’ proposed board changes image 0

A snapshot of Bitfarms stock. Source: TradingView

The letter concluded with Bitfarms defending its proposed acquisition of mining company Stronghold to grow operations and rebalance its energy portfolio toward the United States.

Related: Bitfarms acquires Stronghold Digital Mining in $125M deal

The corporate feud escalates

Riot Platforms is Bitfarms’ largest shareholder, with a 19.9% stake. In May 2024, Riot Platforms began increasing pressure on Bitfarms to accept a $950 million takeover bid after making a private offer to buy the company in April.

In response to mounting pressure, Bitfarms adopted a  shareholder rights plan  to thwart the hostile takeover attempt. The plan proposed selling discounted shares to investors should any individual investor increase their stake in Bitfarms to a 15% threshold.

To prevent the shareholder plan from being triggered, Riot Platforms, which held a 14.9% stake in Bitfarms at the time, pivoted from purchasing more shares to suggesting three independent candidates  for the company ’ s board of directors.

The escalating tension between the two companies resulted in Bitfarms calling for a special shareholder meeting on Oct. 29, 2024, to address Riot Platforms’ hostile takeover attempt.

In July 2024, the Ontario Capital Markets Tribunal, a Canadian financial regulator, forced Bitfarms to abandon its “poison pill” strategy of adopting a shareholder rights plan.

Riot Platforms increases stake in Bitfarms

Shortly following the forced invalidation of Bitfarms’ shareholder rights plan, Riot Platforms increased its stake in the company to 18.9% and later 19.9%.

In Riot Platforms’ latest open letter to Bitfarms shareholders, the company stressed that Bitfarms needs to accept the independent board members suggested by Riot and cautioned Bitfarms against taking any action or engaging in any transaction that further “entrenches” the board.

The letter specifically mentioned Bitfarms’ proposed acquisition of Stronghold, noting that the mining firm has been listed for sale for a long time without any of Bitfarms’ competitors purchasing it at the advertised price.

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