Bitfarms Ltd. (BITF) announced on Wednesday that it has entered into a definitive merger agreement to acquire Stronghold Digital Mining, Inc. (SDIG) in a stock-for-stock deal valued at approximately $125 million in equity, along with the assumption of $50 million in debt. Following the news, the stock fell 5% in the pre-market.
According to the terms of the merger agreement, Stronghold shareholders will receive 2.52 shares of Bitfarms for each share of Stronghold, reflecting a 71% premium. Upon completion of the transaction, Stronghold shareholders are anticipated to hold just under 10% of the newly combined entity.
This acquisition is projected to contribute up to 307 MW of power capacity, increasing Bitfarms' energy portfolio to over 950 MW by the end of 2025, with nearly half of that capacity located in the United States.
Additionally, the merger will enhance Bitfarms' Hashrate by 4.0 EH/s, with the potential to expand beyond 10 EH/s, and will facilitate vertical integration into power generation with a nameplate capacity of 165 MW. The company will also gain access to 142 MW of PJM import capacity, which can be expanded to 790 MW, and will benefit environmentally through waste reclamation and potential carbon capture initiatives.
The deal is expected to close in the first quarter of 2025, pending necessary approvals.
In pre-market activity on the Nasdaq, the shares are trading at $2.24, down 5.08%.
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