NAIROBI (CoinChapter.com) — Kerrisdale Capital launched a scathing assault on U.S. Bitcoin miners, labeling them as “snake oil salesmen.” In a sequence of tweets on June 5, Kerrisdale accused mining firms of destroying investor capital and harming the surroundings, notably concentrating on Riot Platforms, a serious U.S. Bitcoin miner.
Sahm Adrangi, CEO of Kerrisdale Capital, emphasised the unprofitability of Bitcoin mining operations. He acknowledged,
“If you’ve got a business that you know is structurally unprofitable, these companies dilute. They issue shares, they take those shares to invest in the business. But there are no returns.”
Kerrisdale reported that Riot issued $41 million in shares within the first 4 months of 2024, resulting in an 18% inventory dilution. Adrangi concluded,
“These are not viable business models. The U.S. mining businesses are structurally screwed.”
Riot Platforms Reply to Criticism
Kerrisdale Capital’s report states that Riot Platforms issued $41 million in shares within the first 4 months of 2024, resulting in an 18% inventory dilution. Sahm Adrangi, CEO of Kerrisdale Capital, believes these actions point out a failing enterprise mannequin.
“These companies dilute shares to invest, but there are no returns,”
Adrangi mentioned
In response, a Riot spokesperson refuted Kerrisdale’s claims, stating, “We disagree with the characterization of the Bitcoin mining industry and Riot. Our growth plans and financial performance will demonstrate the report’s errors.”
William Foxley of The Mining Pod supplied an alternate perspective. Foxley highlighted the bullish outlook for U.S. Bitcoin mining, notably if political assist continues. “Bitcoin mining in the U.S. is incredibly bullish, especially with another Trump presidency,” Foxley mentioned. He additionally famous that states like Texas and Tennessee present substantial safety for miners.
Regulatory Scrutiny Towards Bitcoin Miners
The Kerrisdale report comes amid rising regulatory scrutiny and public backlash towards Bitcoin miners in Texas. Adrangi identified that Texas vitality insurance policies favoring Bitcoin miners are below assessment, with current choices towards tax reductions for mining initiatives.
In Navarro County, officers voted towards a tax discount for Riot’s Corsicana facility, citing issues over vitality consumption and environmental impression. Adrangi emphasised, “The Texas energy policy with respect to Bitcoin mining makes no sense.”
William Foxley of The Mining Pod provided a counter-perspective, suggesting that Bitcoin mining within the U.S. stays bullish. Foxley famous, “Bitcoin miners might enjoy special protections, especially with shifting political winds favoring energy production.”
Foxley additionally highlighted that states like Texas and Tennessee proceed to court docket Bitcoin miners, offering a positive enterprise surroundings.
Kerrisdale’s Continued Efforts
Kerrisdale has prolonged its efforts by contacting Texas state officers, urging them to disclaim Riot’s future tax abatement requests. The agency cited security issues at Riot’s Rockdale facility and questioned using sure cooling merchandise.
Kerrisdale’s report led to an preliminary drop in Riot’s inventory price, which fell 8.9% on June 5. Nonetheless, the inventory has since stabilized, suggesting the market’s blended reception to Kerrisdale’s findings.