An investment firm is attacking the Bitcoin mining industry

Investment management firm Kerrisdale Capital has hit out at the US Bitcoin mining industry, describing it as a haven for "snake oil salesmen" who waste investors' money and harm the environment.

In a recent X post, the company revealed its campaign against the growing industry by announcing two letters sent to Texas authorities.

One letter was addressed to the Navarro City Commission, where Riot Blockchain operates, and the other was sent to Texas state senators.

The company insists on stricter rules for the mining of Bitcoin in Texas, drawing parallels to fraudulent schemes uncovered in China a decade ago. Texas, with its low energy costs, is a major US Bitcoin mining hub.

Kerrisdale Capital revealed it is shorting Riot Blockchain stock, citing it as an example of “dysfunctional bitcoin mining business model" stuck in "a vicious cycle of cash burn". They argue that public mining companies rely primarily on issuing new shares to fund operations, even during Bitcoin price peaks, which shows a vicious business model.

It is also said that even with record Bitcoin prices, many mining operations are struggling to be profitable, facing environmental and regulatory challenges. They suggest that with the rise of Bitcoin ETFs, owning shares of mining companies represents unnecessary risk as ETF issuers have purchased billions of BTC on behalf of their clients.

Today, we launch a war against bitcoin miners, an industry of snake oil salesmen that are incinerating both investor capital and the environment and should be banished from America much like the Chinese RTO frauds that we helped kick out a decade ago (1/10)

— Kerrisdale Capital (TradFi) (@KerrisdaleCap) June 5, 2024