Bitfarms acquires Stronghold Digital Mining in $125M deal

As part of the acquisition, Stronghold shareholders will receive 2.52 shares of Bitfarms for each share held.

Bitcoin (BTC) mining company Bitfarms has announced its acquisition of Stronghold Digital Mining for about $125 million equity value. The acquisition takes into account assumed debt of about $50 million.

The transaction may add up to 307 megawatts of power capacity and is expected to put Bitfarms on track to increase its energy portfolio to over 950 megawatts by the end of 2025. 

“After three years of ongoing discussions, I am proud to announce this transformative acquisition, which is a decisive step in securing a strong future for Bitfarms,” Ben Gagnon, CEO of Bitfarms, said in a statement. 

Shares of Stronghold rose about 55 percent on Nasdaq in pre-market trading to $4.55. 

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Bitcoin mining firms have been under pressure because of reduced mining rewards after the Bitcoin halving. Their debt burden and past poor management have also been causes of concern. 

Shareholders to get 2.52 shares for each share held

Stronghold shareholders will receive 2.52 shares of Bitfarms for each share of Stronghold they own, representing consideration per share of $6.02. That is a 71% premium to the Stronghold 90-day volume-weighted average price on Nasdaq as of Aug. 16. 

Speaking in detail about the acquisition, Gagnon said:

“With this transaction, we expect to expand and rebalance our energy portfolio to 950 MW with nearly 50% in the US by the end of 2025 and have visibility on multi-year expansion capacity up to 1.6 GW with approximately 66% in the US, up from approximately 6% today.”

Stronghold shareholders are expected to own just under 10% of the combined company, based on the current issued and outstanding shares of each company, according to the statement.

Increasing shareholder value through acquisition

By vertically integrating with power generation, expanding energy trading capabilities and securing two high-potential sites for high-performance computing and artificial intelligence, and with significant multi-year expansion potential, Gagnon said Bitfarms aims to diversify beyond Bitcoin mining to create greater long-term shareholder value.

Stronghold Digital Mining has been considering selling the company for a while now. In April, Stronghold filed a registration statement to sell up to $250 million in securities to reduce its debt through share dilution.

Stronghold’s first quarter 2024 results included revenues of $27.5 million, up 27% from the previous quarter and 59% year over year. The breakdown of revenues included $26.7 million from cryptocurrency operations, $700,000 from the sale of energy and a further $100,000 from “other activities.”

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