Kerrisdale Capital, an American investment firm, ignited a storm of reactions on Wednesday with a series of public communications aggressively targeting Bitcoin mining companies. In several parts thread on
“Today we are launching a war on Bitcoin miners, an industry of snake oil salesmen who incinerate both investor capital and the environment and which should be banned from America, just like the frauds Chinese RTOs that we helped eliminate a decade ago,” the company said. declared.
Kerrisdale also revealed that she began by sending letters to Texas officials, including the Navarro City Commission and state senators, outlining their grievances and calling for regulatory action. Additionally, the company disclosed its financial status, stating: “We are short RIOT (and long Bitcoin as a hedge). »
Kerrisdale’s critique focuses on the economic model of Blockchain RIOT, which he says is inherently flawed: “Like other US-listed mining companies, RIOT’s business model is a dysfunctional hamster wheel that burns cash, which is why it plunders shareholders of retail with non-stop broadcasts from vending machines to finance its operations. » They pointed out that despite the high BTC market prices, RIOT’s operations after the halving have not been profitable.
Further financial analysis from Kerrisdale highlighted that RIOT has issued $2.3 billion in shares since 2020, resulting in a six-fold increase in the number of shares outstanding to fund $1.6 billion in consumer spending. of liquidity. According to Kerrisdale, this does not correspond to an increase in Bitcoin production per share or BTC holdings per share, leading them to conclude that the only benefit to shareholders would come from rising Bitcoin prices – a strategy that they consider insufficient to invest.
Environmentally, Kerrisdale has criticized Bitcoin mining for its high energy consumption and reliance on incentives that may not align with broader environmental goals. “RIOT’s economic situation would be even worse without generous network incentives and tax credits,” the company argued, noting that such benefits are questioned by regulators and may not endure.
Bitcoin mining industry and experts respond
The industry response was swift, with several figures defending the sector and attacking Kerrisdale’s motivations and understanding of the space. Daniel Batten, founder of CH4 Capital and advisory board member of mining giant Bitcoin Marathon, suggested that Kerrisdale should focus more on improving investor returns rather than attacking industry practices.
Respectfully, perhaps you should redeploy some of that enthusiasm (and focus) on increasing returns for investors? pic.twitter.com/2HR3hVFztw
-Daniel Batten (@DSBatten) June 6, 2024
Upstream Data’s Adam O defended the environmental impact of Bitcoin mining, declaring, “Good luck vilifying what improves all stakeholders, reduces waste and reduces methane emissions. The stupidest mission of the decade. Steven Lubka, head of private clients and family offices at Swan Bitcoin, criticized Kerrisdale’s strategy and highlighted failure MicroStrategy Short Position (MSTR) which they entered into two months ago, as well as the decline in their assets under management, a sign of deeper problems within the company itself.
“Let’s take a look at these absolute losers who are screaming at the government to save their short position in MSTR by FUD mining. (…) Let’s now take a look at their assets under management. $318 million this quarter, let’s see where they were a few years ago? $1.3 billion. This represents a significant drop in their total assets/amount invested. In conclusion, they are trying to save their fund because they know that MSTR is about to go higher by appealing to the government.
The debate also extended to environmental merits of bitcoin mining. Simon Dixon, an angel investor, presented facts debunking the myth that Bitcoin mining is primarily harmful to the environment. He highlighted Bitcoin mining’s role in mitigating methane emissions and its synergies with renewable energy sources such as solar and wind, as well as its ability to help balance the grid.
Dig Deeper pic.twitter.com/JQmdIw7SkD
– Simon Dixon (@SimonDixonTwitt) June 5, 2024
Mark Harvey, a Bitcoin educator, just said: “You will get a higher ROI and more friends by simply buying and holding Bitcoin. »
At press time, BTC was trading at $70,820.
Featured image created with DALL·E, chart from TradingView.com
