Key Takeaways
- The acquisition is expected to enhance Bitfarms’ energy capacity, potentially adding up to 307 megawatts (MW) of power.
- Following the announcement, Stronghold’s shares surged by 55% in pre-market trading to $4.55, while Bitfarms’ shares decreased by 7% to $2.19.
Leading bitcoin miner, Bitfarms, will be acquiring Stronghold Digital Mining in a transaction valued at approximately $125 million in equity. The deal also includes an assumed debt of around $50 million.
Under the terms of the agreement, Stronghold shareholders will receive 2.52 Bitfarms shares for each Stronghold share, representing a value of $6.02 per share—a 71% premium to Stronghold’s 90-day volume-weighted average price on Nasdaq as of August 16.
The announcement had an immediate impact on stock prices, with Stronghold’s shares rising by 55% in pre-market trading to $4.55, while Bitfarms’ shares decreased by 7% to $2.19.
This acquisition comes at a time when the Bitcoin mining industry is adjusting to the effects of April’s Bitcoin halving, which cut mining rewards by 50%. This reduction has led companies to focus on reducing costs and upgrading to more energy-efficient equipment.
A publicly listed BTC miner from Wall Street, BitFuFu’s cost to mine one Bitcoin from self-mining operations soared to $51,887 in Q2 2024, up from $19,344 in the same period last year.
Commenting on the development, Bitfarms CEO Ben Gagnon stated, “After three years of discussions, this acquisition represents a key step in securing Bitfarms’ future,” he stated. Gagnon noted that the deal supports Bitfarms’ strategy to diversify beyond Bitcoin mining.
“By integrating power generation, expanding energy trading capabilities, and securing sites for high-performance computing (HPC) and artificial intelligence (AI), we aim to create long-term value,” he added.
The acquisition is expected to enhance Bitfarms’ energy capacity, potentially adding up to 307 megawatts (MW) of power. This expansion would bring Bitfarms’ total energy portfolio to over 950 MW by the end of 2025. Gagnon outlined the company’s plans, saying, “We anticipate expanding our energy portfolio to 950 MW with nearly 50% in the U.S. by 2025, with potential growth up to 1.6 GW, increasing U.S. capacity from 6% to approximately 66%.”
Stronghold has been considering a sale for some time, having filed a registration statement in April to sell up to $250 million in securities to reduce its debt.
In the first quarter of 2024, Stronghold reported revenues of $27.5 million, a 27% increase from the previous quarter and a 59% increase year over year. Most of this revenue, $26.7 million, came from cryptocurrency operations, with additional income from energy sales and other activities.
Upon completion of the merger, Stronghold shareholders are expected to hold just under 10% of the combined company, based on the current shares outstanding of both companies.
