Bitfarms (BITF) M&A Announcement summary

Deal rationale and strategic fit

• Vertically integrates by acquiring two U.S. power plants, expanding the energy portfolio to over 300 MW and providing a clear path to 950 MW active power capacity, with long-term expansion potential up to 1.6 GW and significant U.S. presence.

• Enables entry into the PJM grid, the largest U.S. wholesale electricity market, enhancing energy trading, cost optimization, and diversification into HPC/AI.

• Advances environmental leadership through reclamation and carbon capture projects, leveraging Stronghold’s remediation technology and expertise.

• Supports scaling of Bitcoin mining, integration of HPC/AI operations, and positions the company as a diversified digital infrastructure leader.

• Stronghold’s assets include two waste-to-energy power plants and over 750 acres of land, with further expansion options.

Financial terms and conditions

• All-stock transaction values Stronghold at $125 million in equity, with an additional $50 million in assumed debt; each Stronghold share receives 2.52 Bitfarms shares, a 71% premium to Stronghold's 90-day VWAP.

• Includes refinancing or waiver of up to $54.6 million in Stronghold's outstanding debt as of June 30, 2024.

• Upon closing, Stronghold shareholders will own just under 10% of the combined company.

• Bitfarms shares will continue trading on Nasdaq and TSX post-transaction.

• Includes customary breakup fees.

Synergies and expected cost savings

• Estimated annual run-rate cost synergies of approximately $10 million, mainly from public company expense reduction, insurance, and administrative efficiencies.

• Additional operational synergies expected from integrating Stronghold’s power generation expertise and capital markets experience.

• Opportunities to enhance energy efficiency, hashrate, and merge HPC/AI with Bitcoin mining operations.