Investment company Kerrisdale Capital has declared a “battle against Bitcoin miners,” labeling them as an “industry of deceitful salesmen.” Meanwhile, mining companies have chosen to remain silent in response.
Kerrisdale’s position aligns with their most recent investment report, which argues that Riot Platforms is on the brink of collapse. Sahm Adrangi, the CEO of Kerrisdale Capital, shed light on the company’s assertions in an interview with Cointelegraph.
Adrangi pointed out that when a business lacks a sustainable model, it often resorts to diluting shares to invest in the company, leading to no returns. According to Kerrisdale’s findings, Riot issued $41 million in shares in the initial four months of 2024, resulting in an 18% stock dilution.
Expressing concern, Adrangi emphasized that U.S. mining businesses are facing structural challenges, stating that it is one of the worst industries he has encountered. Kerrisdale has taken a short position on Riot.
In response to Kerrisdale’s claims, Riot has refuted the allegations, asserting that the company and the Bitcoin mining industry are being unfairly criticized. Despite the report, Riot remains confident in its growth plans for 2024.
When contacted for comments on the report, various U.S. Bitcoin mining firms declined to speak, adding to the industry’s reticence in light of Kerrisdale’s accusations.
To offer an alternate viewpoint, Cointelegraph spoke with William Foxley from The Mining Pod, a leading Bitcoin mining podcast. Foxley expressed optimism about the future of Bitcoin mining in the U.S., particularly under another Trump administration. He dismissed the idea of shorting Bitcoin mining, highlighting the importance of share issuance for development funding.
Kerrisdale’s report highlights the challenges faced by U.S. Bitcoin miners in Texas, where energy costs are soaring. Residents are growing increasingly frustrated with the high energy consumption of Bitcoin miners, leading to a backlash against the industry.
Kerrisdale has taken further steps by reaching out to state legislators to discourage them from granting any tax reductions to Riot. The firm has raised concerns about safety issues at Riot’s facilities and their use of unauthorized products.
Although Kerrisdale’s report initially caused a drop in Riot’s stock price, the company has since seen a rebound. Despite the short-term impact, Riot’s stock appears to have stabilized around the $10 mark.
In a surprising turn of events, Riot has sought support from former President Trump, who has voiced his backing for Bitcoin mining in the U.S. through a social media post. Adrangi remains skeptical of Trump’s influence on the industry, emphasizing the need for a critical assessment of Bitcoin mining practices.