Kerrisdale Capital, an investment management company, has x.com/KerrisdaleCap/status/1798346114279911575″ target=”_blank” rel=”noopener nofollow”>thrown out a scathing attack on the bitcoin mining industry in the United States, calling it a haven for “snake oil salesmen” who devour investors' capital and harm the environment.
Investment firm attacks bitcoin, claims mining model is flawed
In a post on x, the management company announced that it had begun its war against the burgeoning industry by drafting two letters to Texas authorities.
One is aimed at the Navarro Municipal Commission, where Riot Blockchain has set up its base. Another letter was sent to Texas state senators.
The investment firm is urging them to crack down on bitcoin mining in the state, likening it to Chinese fraudulent schemes exposed a decade ago.
What stands out is that their fight will focus on bitcoin mining operations in Texas. Considering its low energy costs, the state is a major hub for bitcoin mining in the United States.
If anything, their opposition to bitcoin mining has led Kerrisdale Capital to reveal that they are actively shorting Riot Blockchain shares. The investment firm believes the mining farm is an “excellent example of a dysfunctional bitcoin mining business model” trapped in “a vicious cycle of cash burn.”
In their assessment, these public mining companies primarily rely on the continuous issuance of new shares to fund their operations, even when bitcoin is at or near all-time highs. The investment firm maintains that this is a sign of a flawed business model.
Kerrisdale Capital also pointed to profitable issuers for these bitcoin mining operations, even as prices are at record levels. In these cycles, they claim that Riot Blockchain has struggled to be in the green. Beyond this, they cite environmental concerns and increasing regulatory scrutiny around mining.
Furthermore, they believe that the availability of spot bitcoin exchange-traded funds (ETFs) means that owning shares of mining farms is an unnecessary risk. Over the past six months, spot ETF issuers in the United States have purchased billions of btc on behalf of their clients.
Miner defends himself, strong network
Unsurprisingly, the attack has sparked outrage. Bob Burnett, the founder of Barefoot Mining, has vehemently expressed x.com/boomer_btc/status/1798510206688661639″ target=”_blank” rel=”noopener nofollow”>refused the “snake oil salesman” label, which emphasizes dedication and hard work to protect the network.
Of note, the founder notes the resilience of many mining companies during difficult market conditions and their role in maintaining the integrity of the broader ecosystem.
Even with the criticisms, the Mempool.Space data sample that the total hash rate remains high and stable at more than 500 EH/s when writing. At the same time, even after the Halving, Foundry USA remains the largest mining farm in the world by hash rate.
Featured image from Canva, TradingView chart
