US Bitcoin miners

NAIROBI ( — Kerrisdale Capital launched a scathing attack on U.S. Bitcoin miners, labeling them as “snake oil salesmen.” In a series of tweets on June 5, Kerrisdale accused mining companies of destroying investor capital and harming the environment, particularly targeting Riot Platforms, a major U.S. Bitcoin miner.

Sahm Adrangi, CEO of Kerrisdale Capital, emphasized the unprofitability of Bitcoin mining operations. He stated,

“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 in the first four months of 2024, leading to an 18% stock dilution. Adrangi concluded,

“These are not viable business models. The U.S. mining businesses are structurally screwed.”

Riot Platforms Respond to Criticism

Kerrisdale Capital’s report states that Riot Platforms issued $41 million in shares in the first four months of 2024, leading to an 18% stock dilution. Sahm Adrangi, CEO of Kerrisdale Capital, believes these actions indicate a failing business model.

“These companies dilute shares to invest, but there are no returns,”

Adrangi said

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 provided an alternative perspective. Foxley highlighted the bullish outlook for U.S. Bitcoin mining, particularly if political support continues. “Bitcoin mining in the U.S. is incredibly bullish, especially with another Trump presidency,” Foxley said. He also noted that states like Texas and Tennessee provide substantial protection for miners.

Regulatory Scrutiny Against Bitcoin Miners

The Kerrisdale report comes amid growing regulatory scrutiny and public backlash against Bitcoin miners in Texas. Adrangi pointed out that Texas energy policies favoring Bitcoin miners are under review, with recent decisions against tax reductions for mining projects.

In Navarro County, officials voted against a tax reduction for Riot’s Corsicana facility, citing concerns over energy consumption and environmental impact. Adrangi emphasized, “The Texas energy policy with respect to Bitcoin mining makes no sense.”

William Foxley of The Mining Pod offered a counter-perspective, suggesting that Bitcoin mining in the U.S. remains bullish. Foxley noted, “Bitcoin miners might enjoy special protections, especially with shifting political winds favoring energy production.”

Foxley also highlighted that states like Texas and Tennessee continue to court Bitcoin miners, providing a favorable business environment.

Kerrisdale’s Continued Efforts

Kerrisdale has extended its efforts by contacting Texas state officials, urging them to deny Riot’s future tax abatement requests. The firm cited safety concerns at Riot’s Rockdale facility and questioned the use of certain cooling products.

Riot stock price chart. Source: Source Google Finance

Kerrisdale’s report led to an initial drop in Riot’s stock price, which fell 8.9% on June 5. However, the stock has since stabilized, suggesting the market’s mixed reception to Kerrisdale’s findings.

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