US investment firm Kerrisdale has launched a full-scale attack on Bitcoin mining, delivering a harsh critique of the industry’s business model, particularly targeting the leading Bitcoin miner in the United States.
Defending the Bitcoin mining sector, the Bitcoin community has emphasized the financial opportunities and environmental advantages it brings.
Kerrisdale Capital, a US-based investment management firm, has initiated a direct confrontation with Bitcoin mining, causing a stir within the crypto community. In a series of posts on the X platform, the firm harshly criticized the industry as well as the top Bitcoin miner, RIOT Blockchain.
In a multi-part thread, the firm described the mining sector as filled with “deceptive sellers”, highlighting the financial difficulties and negative environmental impact it poses.
“We are now declaring war on Bitcoin miners, an industry of deceptive sellers that are not only burning through investor capital but also harming the environment, and they should be expelled from America, similar to the Chinese RTO frauds we helped eliminate a decade ago,” the firm declared.
Criticizing the flawed business model of Bitcoin mining, the firm specifically targeted RIOT Blockchain, a publicly traded Bitcoin mining company.
Similar to other US-listed miners, $RIOT’s business model is a dysfunctional cycle of cash depletion, which is why it continuously drains retail shareholders through constant ATM issuance to sustain operations. Even with $BTC reaching near all-time highs, post-halving $RIOT’s mining operations are not profitable,” the firm stated.
The firm highlighted that the industry is capital-intensive, highly competitive, offers a pure commodity product, and is facing increasing regulatory scrutiny.
“Despite the significant investment in facilities and equipment, $RIOT’s BTC production per share and BTC holdings per share have decreased. The only way shareholders benefit is if Bitcoin prices rise – which is a risky way to invest in Bitcoin compared to low-fee ETFs,” the firm explained.
While the firm disclosed its short position on RIOT, it expressed optimism towards Bitcoin. Throughout its posts, the firm praised the newly introduced Bitcoin ETFs, which have attracted over $50 billion in investments in less than six months.
In response to Kerrisdale Capital’s criticism, the Bitcoin mining industry pushed back against the hedge fund’s negative stance. Figures like Daniel Batten from Marathon and Adam O from Upstream Data dismissed environmental concerns, while Steven Lubka from Swan Bitcoin highlighted Kerrisdale’s financial challenges.
Investor Simon Dixon countered by emphasizing the potential for renewable energy integration and methane emission reduction in Bitcoin mining. Bitcoin educator Mark Harvey proposed a straightforward solution: acquiring and holding Bitcoin.
Despite facing backlash for its environmental impact and resource consumption, research has shown that Bitcoin mining can stimulate economies, generate employment, and promote the adoption of green energy.
As of the latest update, BTC is trading at $70,700 after a slight decline in the past 24 hours. The leading cryptocurrency has surged by 3.5%, surpassing the $70,000 mark.