Short sellers have amassed a staggering $3 billion in bets against Bitcoin mining stocks like Marathon Digital and Riot Platforms, anticipating a potential short squeeze.[1] Despite the surge in Bitcoin transaction fees boosting miners' revenue, these stocks have underperformed, attracting significant short interest.

The data reveals that Marathon Digital has 25.68% of its float shorted, while Riot Platforms has 13.48% shorted.[2] This crowded short positioning, coupled with the stocks' recent rallies, has set the stage for a potential short squeeze scenario. A short squeeze occurs when an unexpected price surge forces short sellers to cover their positions, further driving up prices.

Technical analysis suggests that the selling pressure from short sellers might be overdone, and a short squeeze could be imminent for these Bitcoin mining stocks.[2] Analysts warn against doubling down on such crowded trades, as short squeezes can lead to massive losses for short sellers, as witnessed in the cases of GameStop and Tesla.[5]

While some traders may be shorting mining stocks to hedge their long Bitcoin positions, the significant short interest and potential for a short squeeze have made Marathon Digital, Riot Platforms, and other mining stocks prime candidates for a short squeeze event.[2][5]

Sources [1] https://www.dlnews.com/articles/markets/short-sellers-pile-3bn-into-squeezable-bitcoin-miner-bets/ [2] Ripe for the squeeze? Bitcoin mining stocks remain under attack ... https://cointelegraph.com/news/ripe-for-the-squeeze-bitcoin-mining-stocks-remain-under-attack-from-short-sellers [3] Be careful! Short sellers are flocking into cryptocurrency stocks, and ... https://longportapp.com/en/news/200831619 [4] Short Sellers Double Down on $11 Billion Bet Against Crypto Stocks https://www.cryptoglobe.com/latest/2024/03/short-sellers-double-down-on-11-billion-bet-against-crypto-stocks/ [5] Crypto Stocks Like MicroStrategy, Coinbase Could Shoot Up if Short ... https://www.coindesk.com/business/2024/03/27/crypto-stocks-like-microstrategy-coinbase-could-shoot-up-if-short-sellers-exit/ [6] Short Sellers Bet $11 Billion That Crypto Stock Rally Won't Last https://www.bloomberg.com/news/articles/2024-03-26/short-sellers-bet-11-billion-that-crypto-stock-rally-won-t-last

Riot Platforms has criticized Bitfarms' adoption of a "poison pill" shareholder rights plan, calling it an unfriendly move aimed at thwarting Riot's unsolicited takeover bid for the company.[1]

The "poison pill" strategy, implemented by Bitfarms, is a defensive tactic designed to make a hostile takeover prohibitively expensive for the acquirer. If triggered, it would dilute Riot's existing 12% stake in Bitfarms by issuing new shares to other shareholders.[4][5]

Bitfarms claims the plan is necessary to protect the integrity of its ongoing strategic review process, which is exploring various alternatives including potential business combinations or a sale.[3][6] The company argues that Riot's continued accumulation of shares undermines this process and prevents maximizing shareholder value.[6]

While Riot can still proceed with a takeover bid in compliance with Canadian securities laws, the "poison pill" raises the acquisition threshold and makes it costlier for Riot to increase its stake beyond 15% before September 10 or 20% thereafter.[3][4][6] The plan requires approval from Bitfarms' shareholders within six months and is awaiting acceptance by the Toronto Stock Exchange.[4][6]

Sources [1] https://www.riotplatforms.com/riot-comments-on-bitfarms-adoption-of-shareholder-unfriendly-poison-pill/ [2] Bitfarms Adopts 'Poison Pill' After Riot Takeover Offer Turns Hostile https://www.bloomberg.com/tosv2.html?url=L25ld3MvYXJ0aWNsZXMvMjAyNC0wNi0xMC9iaXRmYXJtcy1hZG9wdHMtcG9pc29uLXBpbGwtYWZ0ZXItcmlvdC10YWtlb3Zlci1vZmZlci10dXJucy1ob3N0aWxl&uuid=b5661115-2767-11ef-90a1-ad955fc55c62 [3] Bitfarms adopts 'poison pill' amid Riot Platforms' takeover attempt https://crypto.news/bitfarms-adopts-poison-pill-amid-riot-platforms-takeover-attempt/ [4] Bitfarms Adopts "Poison Pill" Strategy in Response to Riot Platforms ... https://www.tftc.io/bitfarms-adopts-poison-pill-riot-takeover-bid/ [5] Bitcoin Miner Bitfarms Counters Riot Platform's Takeover Bid with ... https://cryptoadventure.com/bitcoin-miner-bitfarms-counters-riot-platforms-takeover-bid-with-poison-pill-strategy/ [6] Bitfarms Announces Adoption of Shareholder Rights Plan https://investor.bitfarms.com/news-events/press-releases/detail/246/bitfarms-announces-adoption-of-shareholder-rights-plan