Bitcoin mining company Bitfarms Ltd. has announced its acquisition of Stronghold Digital Mining, valued at approximately $125 million. The transaction includes assumed debt of about $50 million.

Ben Gagnon, CEO of Bitfarms, stated that the acquisition will add power capacity by up to 307 megawatts, positioning the mining firm to expand its energy portfolio to over 950 megawatts by the end of 2025.

Stronghold shareholders to benefit from premium valuation and stock swap

As part of the deal, Stronghold shareholders will receive 2.52 Bitfarms shares for each share held, the companies said in a statement Wednesday. That’s a premium of around 70 percent of Stronghold’s 90-day volume-weighted average price on Nasdaq as of Aug. 16. 

After the news on the acquisition came out Stronghold’s shares surged approximately 55% in pre-market trading on Nasdaq, reaching $4.55. This reaction underscores investor optimism about the acquisition and its potential impact on shareholder value.

Bitfarms’ acquisition comes at a time when Bitcoin mining firms face challenges due to reduced mining rewards following the Bitcoin halving. Increased debt burdens and management concerns have also been prominent issues within the industry.

Stronghold revenues have grown by 27% in the first quarter of 2024

Stronghold Digital Mining, which had been exploring sale options for some time, had recently filed a registration statement in April to sell up to $250 million in securities. This move was intended to address its debt through share dilution.

For the first quarter of 2024, Stronghold reported revenues of $27.5 million, marking a 27% increase from the previous quarter and a 59% rise year-over-year. The revenue breakdown included $26.7 million from cryptocurrency operations, $700,000 from energy sales, and $100,000 from other activities.

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