Bitcoin miners: miners have been mum in the wake of a critical study from Kerrisdale Capital. The investment firm Kerrisdale Capital has started a “war against Bitcoin miners,” calling Bitcoin an “industry of snake oil salesmen.”..” Companies in the mining industry have largely chosen not to respond.
However, Kerrisdale’s most recent investment report says Riot Platforms is “headed for a mine.” We talked to Sahm Adrangi, CEO of Kerrisdale Capital, about this.
A common occurrence in public markets is corporations diluting their holdings when they do not have a viable business plan or run a structurally unsuccessful enterprise, according to Adrangi. To invest in the company, they issue shares and then cash out them. But you can’t get your money back.
In the first quarter of 2024 alone, Riot diluted its stock by 18%, according to Kerrisdale, by issuing $41 million in new shares. Such business models cannot be sustained. According to Adrangi, the mining industry in the United States is “one of the worst I’ve ever seen.” The companies operating within it are fundamentally flawed.
Riot Refutes Claims, Industry Demurs
Responding to Kerrisdale’s article, a Riot representative spoke with. This business disputes Kerrisdale’s assertions categorically: Spokespeople for Riot expressed their disagreement with the report’s portrayal of the Bitcoin mining industry and the company, as well as the equally flawed conclusions drawn by Kerrisdale Capital. “Our bold growth plans for 2024 and the financial results that follow will show these mistakes,” the company said.
concerning the study, mining companies. Nobody was available or interested in defending the industry, even when we invited them to do so. To hear an opposing viewpoint to Adrangi’s, interviewed William Foxley of The Mining Pod, which claims to be the most popular Bitcoin mining podcast.
Assuming Trump gets re-elected, the U.S. bitcoin mining industry is very bullish. “The political tides are turning in favor of energy production, and if Bitcoin miners can maintain their cooperation with the Trump administration, they may even enjoy special protections,” Foxley added. According to Foxley, a veteran of the Bitcoin mining industry who has worked with Compass and other companies over the past four years, the industry’s future is unrelated to the electoral successes of former president Donald Trump.
Additionally, Foxley stated, “It’s probably not the best moment to short Bitcoin mining.” He concluded, “Although Bitcoin miners frequently use a significant amount of [share issuance] to finance development, there is solid precedent for employing such a strategy depending on the firm’s performance.”
The Backlash Against U.S. Bitcoin Mining
“cheap energy and a lax regulatory environment” drew Bitcoin miners from the United States to Texas, but “the honeymoon is over,” as Kerrisdale puts it. According to Adrangi, who spoke about the Texas energy policy and Bitcoin mining, it is absurd. That these Bitcoin miners are beneficial to the power system is a complete myth. I can’t believe people truly believe such a tortuous mind process. The energy consumption of Bitcoin miners is substantial. Their use puts a burden on the system.
As proof that the tide is turning against miners, the Kerrisdale study cites a recent ruling in Navarro County. The commissioners rejected a plan to lower taxes on Riot’s crucial Corsicana expansion project on March 11. According to Riot, the expansion would generate hundreds of new jobs and millions of dollars in investment. On the other hand, lawmakers are becoming more hesitant to grant favourable tax terms to the industry.
As air conditioners go into high gear this summer, Texans should expect energy costs to remain high. In April, the Dallas Morning News published a story stating that electricity sold for 82% more than in 2023. Some Texans are furious because Bitcoin miners use so much power and water.
Several advocacy organizations have spoken out against Riot and other American mining corporations, claiming that they “squander insane amounts of energy and drive up every Texan’s electricity bills.” Nonetheless, Riot will likely ask for additional abatements because the matter is far from resolved.
Kerrisdale Contacts Officials
However, Kerrisdale Capital explores US Bitcoin mining and more. To oppose Riot’s abatement petitions, Kerrisdale approached state politicians. Adrangi said, “The whole industry should be kicked out of the U.S., just like it was out of China.”
In a letter to the Navarro County court and commissioners, Kerrisdale mentions a former employee who believed the Rockdale plant at Riot was unsafe. All over the floor and everywhere else was dielectric fluid. Speaking to Kerrisdale, the employee warned that the substance was combustible and unhealthy to breathe.
Imagine yourself navigating an electrical bomb while sliding on dielectric fluid. The worker complained that “that’s really what the job was” and that the workplace lacked adequate safety measures. Kerrisdale claims Riot is struggling with ExxonMobile for cooling immersion miners with Spectrasyn 2C, an authorized chemical. Kerrisdale claims Riot is struggling with ExxonMobile for cooling immersion miners with Spectrasyn 2C, an authorized chemical.
According to Kerrisdale, Riot likely utilized Spectrasyn 2C at Rockdale because it was difficult to find safe, non-toxic, and competitively-priced immersion fluids. Riot was an early adopter of large-scale immersion-cooled Bitcoin mining. Kerrisdale contends that lawmakers ought to reconsider their decision to grant any more abatement requests.
Kerrisdale’s Impact is Unclear
On June 5, Riot stock dropped significantly due to Kerrisdale’s report. Its stock price dropped 8.9 per cent to $9.65 on Wednesday. In the time after, though, the stock has climbed again. Riot stock has fluctuated between $9.50 and $10.96 over the last 30 days. Riot stock was trading at $10 as of this writing, which could indicate that the company had, for the time being, survived the worst of the effect.
Riot’s Trump Card?
Riot is arguing its case to Trump, while Kerrisdale has already convinced the market and Texas lawmakers. After meeting with Riot’s public policy director Brian Morgenstern and CEO, Jason Les, Trump delivered a statement that was highly supportive of the business and even brought up the idea of a digital currency produced by the US Central Bank (CBDC).
Bitcoin mining could be our final defence against a central bank digital currency (CBD),” Trump wrote in a June 12 post to TruthSocial. Russia, China, and the far left of communism benefit from Biden’s anti-Bitcoin stance. The remaining Bitcoin should be manufactured in the United States. Being energy-dominant will be much easier with this! However, Adrangi was dissatisfied with Trump’s support when Cointelegraph asked if it would change his mind about Bitcoin mining.