Investment company Kerrisdale Capital has initiated a campaign against Bitcoin miners, branding them as “snake oil salesmen.” In response, mining companies have chosen not to comment.
Kerrisdale’s argument aligns with its recent investment report, which asserts that Riot Platforms is on the verge of collapse.
Sahm Adrangi, the CEO of Kerrisdale Capital, shed light on the company’s stance in an interview with Cointelegraph. Adrangi emphasized the pitfalls of businesses lacking a sustainable model, highlighting the negative impact of stock dilution and a lack of returns.
According to Kerrisdale, Riot has issued $41 million in shares in early 2024, resulting in an 18% dilution in stock value. Adrangi criticized the structural flaws in U.S. mining companies, labeling the industry as one of the worst he has encountered.
Kerrisdale has taken a short position on Riot, but the company has refuted these claims, stating that they have ambitious growth plans for 2024 that will demonstrate their financial performance.
Despite attempts to defend the industry, U.S. Bitcoin mining firms have either declined to comment or were unavailable when approached by Cointelegraph.
William Foxley from The Mining Pod provided an alternative view, expressing optimism about the future of Bitcoin mining in the U.S. He highlighted potential benefits under a Trump administration and defended the use of share issuance as a funding strategy.
Kerrisdale’s criticism extends to Texas, where Bitcoin miners initially flocked for cheap energy and regulatory leniency. However, recent developments, such as Navarro County’s decision against tax reduction for Riot’s expansion, indicate a shift in sentiment against miners.
The energy consumption of Bitcoin miners in Texas has drawn backlash from residents and environmental groups, who argue that mining activities drive up electricity bills and strain the energy grid.
Kerrisdale has reached out to state legislators to discourage further tax incentives for Riot, citing safety concerns at their facilities and alleged improper use of cooling products.
While Kerrisdale’s report initially caused Riot’s stock to drop, the company has since rebounded. Despite the short-term impact, Riot’s stock price remains relatively stable around the $10 mark.
In a surprising twist, Riot has garnered support from former President Trump, who praised the industry’s role in countering the threat of a U.S. central bank digital currency. Trump’s endorsement has raised questions about the future trajectory of Bitcoin mining, but Kerrisdale remains steadfast in its critique of the industry.
American Bitcoin miners remain quiet in response to Kerrisdales accusations of snake oil