In a bold move, US investment firm Kerrisdale has launched a full-scale attack on Bitcoin mining, criticizing the business model of the country’s leading Bitcoin miner.
The Bitcoin community has stepped up to defend Bitcoin mining, emphasizing its financial opportunities and positive environmental impact.
Kerrisdale Capital, a US-based investment management firm, has taken aim at Bitcoin mining, causing a stir within the crypto community. In a series of posts on the X platform, the firm delivered a scathing assessment of the industry, particularly targeting RIOT Blockchain, the top Bitcoin miner.
Describing the mining sector as filled with “snake oil salesmen”, Kerrisdale Capital highlighted the financial difficulties and environmental harm associated with the industry.
“We are declaring war on Bitcoin miners, a group of snake oil salesmen who are burning through investor funds and damaging the environment. They should be expelled from America, much like the Chinese RTO frauds we helped remove a decade ago,” the firm declared.
Pointing out the flaws in the Bitcoin mining business model, Kerrisdale Capital specifically criticized RIOT Blockchain, a publicly traded Bitcoin mining company.
According to the firm, RIOT’s business model is unsustainable, draining cash and relying on continuous ATM issuances to stay afloat. Even with Bitcoin prices near all-time highs, RIOT’s mining operations are not profitable post-halving.
The firm also noted that Bitcoin mining is capital intensive, fiercely competitive, produces a standard commodity, and is facing increasing regulatory scrutiny.
Despite significant investments in facilities and equipment, RIOT’s Bitcoin production and holdings per share have declined. Kerrisdale Capital emphasized that shareholders only benefit when Bitcoin prices rise, which is not a sound investment strategy compared to low-fee ETFs.
While Kerrisdale Capital revealed its short position on RIOT, it expressed a positive outlook on Bitcoin, particularly praising the newly launched Bitcoin ETFs that have attracted over $50 billion in investments in less than six months.
In response to Kerrisdale Capital’s criticism, the Bitcoin mining industry defended itself. Figures like Daniel Batten of Marathon and Adam O of Upstream Data dismissed concerns about environmental impact, while Steven Lubka of Swan Bitcoin highlighted Kerrisdale’s financial challenges.
Investor Simon Dixon countered by advocating for renewable energy integration and methane emission reduction in Bitcoin mining. Bitcoin educator Mark Harvey suggested a straightforward solution: buying and holding Bitcoin.
Despite facing backlash for its environmental impact, research has shown that Bitcoin mining can stimulate economies, generate employment, and promote green energy initiatives.
At the time of writing, BTC is trading at $70,700 following a slight decline in the past 24 hours. The leading cryptocurrency has experienced a 3.5% increase, surpassing the $70,000 mark.