CASTLE ROCK, Colo. - Riot Platforms, Inc. (NASDAQ: NASDAQ:RIOT), a Bitcoin mining and digital infrastructure company, has announced the acquisition of additional shares in Bitfarms Ltd., increasing its ownership stake and signaling intentions to nominate new board members.
On Wednesday, Riot acquired 1,460,278 common shares of Bitfarms, representing approximately 0.37% of the company's issued and outstanding shares. The shares were purchased through the Nasdaq Stock Market and other open market trades at a weighted average price of roughly $2.45 per share, totaling an investment of about $3.58 million.
Prior to this transaction, Riot beneficially owned approximately 11.63% of Bitfarms' common shares. With the latest purchase, Riot's ownership has risen to roughly 12.00%. This move comes as Riot expresses serious concerns about Bitfarms' corporate governance and plans to call for a special meeting of shareholders to nominate new, independent directors to the board.
Riot's strategic actions suggest a push for significant influence over Bitfarms' corporate decisions. The company has indicated that it will continue to review its investment and may adjust its position based on various factors, including market conditions and discussions with Bitfarms' management and board.
Investors and the market at large will be monitoring Riot's moves closely, as this could signal a shift in Bitfarms' governance and strategic direction. Riot has made it clear that it is considering various actions, which may include changes to the board composition, further investment, or other measures to increase or hedge its economic exposure to Bitfarms without affecting its beneficial ownership.
In other recent news, Bitfarms Ltd., a global Bitcoin mining company, has been the subject of several important developments. H.C. Wainwright initiated coverage on Bitfarms shares with a Buy rating and a price target of $4.00, expressing confidence in the company's strategic growth strategies and operational performance.
However, Stifel Canada downgraded Bitfarms stock from Speculative Buy to Hold, reducing the price target to $2.30 due to tensions surrounding RIOT Platforms Inc.'s attempted acquisition of Bitfarms.
Simultaneously, Compass Point maintained a Buy rating on Bitfarms but reduced the price target to $6.00 following the company's Q1 2024 performance that fell below expectations. Despite this, the firm highlighted Bitfarms' strategic timing in the Bitcoin hash price cycle and potential growth from its expansion in Paraguay and fleet upgrades.
Bitfarms has also announced significant operational advancements, securing an additional 100 megawatts of sustainable hydropower in Paraguay, potentially adding 6 exahash per second to its capacity in 2025. The company's first quarter 2024 financial results outlined ambitious growth objectives and operational enhancements, with a 9% revenue increase from the previous quarter, reaching $50 million.
InvestingPro Insights
As Riot Platforms increases its stake in Bitfarms Ltd., investors are keenly observing the metrics that could highlight the potential and challenges of this strategic move. According to InvestingPro data, Bitfarms boasts a market capitalization of approximately $998.46 million, with a significant revenue growth in the last twelve months as of Q1 2024, at 26.09%. Despite not paying dividends, Bitfarms has demonstrated a strong return over the last year with a 124.11% increase in its stock price.
An InvestingPro Tip indicates that analysts are expecting sales growth for Bitfarms in the current year, which aligns with Riot's decision to increase its investment. Additionally, Bitfarms holds more cash than debt on its balance sheet, providing a degree of financial stability that may reassure investors considering Riot's aggressive strategy.
However, it's worth noting that Bitfarms' gross profit margin is in the negative, at -3.2%, reflecting some of the operational challenges the company faces. The stock's volatility and the fact that analysts do not anticipate Bitfarms to be profitable this year are factors that investors should weigh against the growth prospects and recent price performance.
For those looking to delve deeper into Bitfarms' financials and future outlook, there are over 10 additional InvestingPro Tips available at https://www.investing.com/pro/BITF. Subscribers can gain a more comprehensive understanding of the investment landscape and make informed decisions. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable insights.
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