Day: June 12, 2024

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Riot Platforms (NASDAQ:RIOT) criticized Bitfarms (NASDAQ:BITF) for adopting a poison pill strategy to prevent a takeover, calling the move “shareholder unfriendly” and highlighting Bitfarms’ weak corporate governance.

Riot stated on Wednesday that it had privately urged Bitfarms to remove its chairman and interim CEO, Nicolas Bonta, and to appoint at least two independent directors to its board. This dispute follows Riot’s unsolicited $950 million acquisition offer made in April, which Bitfarms rejected, deeming it undervalued. In response, Bitfarms approved a poison pill plan to block hostile takeover attempts.

The plan specifies that if any entity acquires more than a 15% stake in Bitfarms between June 20 and September 10, Bitfarms will issue additional shares to other stockholders, diluting the acquiring entity’s stake. Riot contended that the 15% trigger “conflicts with established legal and governance standards.”

Riot CEO Jason Les stated, “We will continue to address the serious corporate governance issues at Bitfarms and ensure that shareholders have a say in the company’s direction.”

Bitfarms did not immediately respond to a request for comment from Reuters.

In a separate regulatory filing, Riot revealed that it had increased its stake in Bitfarms to 13.1% from 12% earlier this month, making it Bitfarms’ largest shareholder, according to LSEG data.

Despite a surge in the crypto industry due to the approval of exchange-traded funds tied to bitcoin’s spot price, shares of Riot and Bitfarms have declined by 35% and 19%, respectively, this year.

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Bitcoin and other cryptocurrencies rallied on Wednesday following U.S. inflation data that came in slightly below expectations, raising hopes that the Federal Reserve might start cutting interest rates later this year. The world’s largest cryptocurrency surged over 4% to above $69,500 shortly after the inflation report’s release.

The Labor Department reported that the annual inflation rate decreased to 3.3% in May, down from 3.4% in April.

While still elevated, the lower-than-expected inflation readings could prompt the Fed to ease its aggressive rate hike measures eventually.

Crypto prices jumped on the news, with Bitcoin rising over $1,900 within minutes. Ether and other altcoins also saw gains as traders reevaluated the macroeconomic landscape.

However, despite the optimistic market response, Wednesday’s report alone might not persuade Fed Chair Jerome Powell and colleagues to start cutting rates immediately. At 3.3%, inflation remains above the Fed’s 2% target.

The Fed is set to conclude its latest policy meeting later on Wednesday.

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The U.S. Consumer Price Index remained unchanged in May, outperforming economists’ expectations of a 0.1% rise and down from 0.3% in April. On a year-over-year basis, CPI increased by 3.3%, slightly lower than both the forecast and April’s reading of 3.4%.

The core CPI, excluding food and energy costs, rose 0.2% in May, better than the anticipated 0.3% rise and down from April’s 0.3%. Year-over-year, core CPI was up 3.4%, below the expected 3.5% and April’s 3.6%.

Bitcoin responded positively to the lower inflation reading, jumping to $69,400, an increase of nearly 4% over the past 24 hours.

After significant drops in inflation throughout 2022 and 2023 due to the Federal Reserve’s aggressive interest rate hikes, the decline had stalled at higher levels than the Fed’s 2% target, dampening market hopes for imminent rate cuts.

At the beginning of this year, traders anticipated five or six 25 basis point rate cuts in 2024 by December. This expectation had decreased to one or two cuts before today’s CPI report, with the first cut not expected until September, according to the CME FedWatch Tool.

Crypto prices have shown high sensitivity to U.S. economic data, noted K33 Research earlier this week. Rising inflation figures and reduced expectations for rate cuts caused Bitcoin to fall from its all-time high above $73,000 in March to below $57,000 in May. Traders believe that looser monetary policies will drive the next phase of the crypto rally to new record prices.

Contrary to U.S. trends, several major central banks worldwide, including the European Central Bank and the Bank of Canada, have begun lowering benchmark rates, pushing the U.S. dollar index to a one-month high.

Investors are also keenly awaiting the Federal Reserve’s “dot plot,” scheduled for release later today, which outlines the Federal Market Open Committee members’ interest rate projections and could significantly impact asset prices.

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