Kerrisdale Capital, an investment management firm Launched A scathing attack on the US Bitcoin mining industry, describing it as a haven for “snake oil salesmen” who gobble up 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 on the booming industry by drafting two letters to Texas authorities.
One is directed to the Navarro City Commission, where Riot Blockchain has established its base. Another letter was sent to Texas senators.
The investment firm is urging them to crack down on Bitcoin mining in the state, comparing it to Chinese fraudulent schemes uncovered a decade ago.
What stands out is that their fight will center around Bitcoin mining operations in Texas. Due to its low energy costs, the state is a major hub for Bitcoin mining in the United States.
If anything, their opposition to Bitcoin mining prompted Kerrisdale Capital to reveal that it is actively selling shares of Riot Blockchain. The investment firm believes the mining farm is a “prime example of a dysfunctional Bitcoin mining business model” that is trapped in a “vicious cycle of cash burning.”
In their assessment, these public mining companies mostly rely on the continuous issuance of new shares to fund operations, even when Bitcoin is at or near all-time highs. The investment firm says this is a sign of a flawed business model.
Kerrisdale Capital also pointed out two sources of profitability for these Bitcoin mining operations, even when prices are at record levels. In these cycles, they claim that Riot Blockchain has struggled to be green. Beyond that, they point to environmental concerns and increased regulatory scrutiny surrounding mining.
Additionally, they believe that the availability of spot Bitcoin exchange-traded funds (ETFs) means that owning shares in mining farms represents an unnecessary risk. Over the past six months, U.S. ETF issuers have purchased billions of dollars worth of bitcoin on behalf of their clients.
The miner is fighting back, and the network is strong
As expected, the attack sparked outrage. Bob Burnett, founder of Barefoot Mining, said it forcefully unacceptable “Snake oil salesman” sign, to emphasize dedication and hard work to secure the network.
It is worth noting that the founder points to the resilience of many mining companies during difficult market conditions and their role in maintaining the integrity of the broader ecosystem.
Even with the criticism, Mempool.Space data Offers The total hash rate remains high and stable at over 500 EH/s when writing. At the same time, even after the halving, Foundry USA remains the world's largest mining farm in terms of hash rate.
Featured image from Canva, chart from TradingView