Kerrisdale Capital, a US investment firm, has launched a direct attack on Bitcoin mining, criticizing the industry’s business model and specifically targeting the leading Bitcoin miner in the country, RIOT Blockchain.
In response, the Bitcoin community has come to the defense of Bitcoin mining, emphasizing the financial opportunities and environmental benefits associated with the industry.
Kerrisdale Capital’s declaration of war against Bitcoin mining has stirred up significant controversy within the crypto community. The firm took to the X platform to outline its criticisms, describing the industry as being full of “snake oil salesmen” who are not only harming investor capital but also the environment.
“The time has come to take a stand against Bitcoin miners, an industry filled with snake oil salesmen who are burning through investor funds and damaging the environment. They should be removed from America, similar to the Chinese RTO frauds from a decade ago,” the firm asserted.
Focusing on the flawed business model of Bitcoin mining, Kerrisdale Capital specifically targeted RIOT Blockchain, a publicly traded Bitcoin mining company. The firm highlighted the capital-intensive nature of the business, intense competition, the commoditization of the product, and increasing regulatory scrutiny as key concerns.
Despite significant investments in facilities and equipment, RIOT Blockchain’s Bitcoin production and holdings per share have dwindled, leaving shareholders reliant on upward movements in Bitcoin prices to see any benefits, according to Kerrisdale Capital.
While Kerrisdale Capital announced its short position on RIOT, it expressed a positive outlook on Bitcoin itself, particularly praising the newly launched Bitcoin ETFs, which have attracted over $50 billion in investment within a short period.
In response to the criticism from Kerrisdale Capital, the Bitcoin mining industry pushed back, with industry figures like Daniel Batten and Adam O dismissing concerns about environmental impact. Steven Lubka pointed to Kerrisdale’s own financial struggles, while investor Simon Dixon highlighted the potential for renewable energy integration and methane emission reduction in Bitcoin mining.
As Bitcoin continues to face backlash regarding its environmental impact and wastage, research has shown that Bitcoin mining can have positive economic effects, create employment opportunities, and drive the adoption of green energy solutions.
Currently, BTC is trading at $70,700 after a slight decline in the past 24 hours, with a 3.5% increase that pushed it above the psychological barrier of $70,000. The cryptocurrency market remains volatile, offering both challenges and opportunities for investors.