US Firm Slams Bitcoin Miners in Environmental Push

Kerrisdale Capital calls Bitcoin mining a scam and environmental hazard, urging regulatory action. This ignited industry backlash, defending mining’s benefits.

With a series of public statements sharply criticizing BTC mining businesses on Wednesday, US investment firm Kerrisdale Capital ignited a firestorm of responses. In a multi-part discussion on X, Kerrisdale declared its campaign against “snake oil salesmen” in the Bitcoin mining business, calling them both an environmental risk and a financial trap.

“We are starting a war on BTC miners today. They are a scammer industry that should be banned from America, just like the Chinese RTO scams that we assisted in ending ten years ago. They are destroying investor capital and the environment.”

Kerrisdale also disclosed that it started with letters to Texas officials, such as state senators and the Navarro City Commission, detailing their complaints and requesting regulatory action. The company also revealed its financial situation: “We’re long Bitcoin as a hedge and short RIOT.”

“Like other US listed miners, RIOT’s biz model is a dysfunctional hamster wheel of cash burn, which is why it loots retail shareholders with non-stop ATM issuance to fund operations,” Kerrisdale’s criticism of RIOT Blockchain focuses on the company’s deficient business strategy. They emphasized that RIOT’s post-halving operations had not turned a profit, even in light of the high market pricing for Bitcoin.

Subsequent Kerrisdale financial investigation revealed that to finance $1.6 billion in cash burn, RIOT has issued $2.3 billion since 2020, resulting in a six-fold increase in outstanding shares. According to Kerrisdale, the sole reward to shareholders would come from rising Bitcoin prices—a strategy they deemed insufficient for investment. This hasn’t coincided with increased Bitcoin output or BTC holdings per share.

Regarding environmental issues, Kerrisdale blasted Bitcoin mining for using a lot of energy and depending on incentives that might not align with more general ecological objectives. The company contended that “RIOT’s economics would look even worse without generous grid incentives and tax credits,” adding that these advantages are under scrutiny from regulators and might not last.

The Bitcoin Mining Sector And Expert Opinions React

The industry reacted swiftly, with several well-known individuals supporting the industry and criticizing Kerrisdale’s intentions and comprehension of the market. Founder of CH4 Capital and member of the advisory board of Bitcoin mining behemoth Marathon, Daniel Batten, recommended Kerrisdale concentrate more on boosting investor returns than criticizing industry norms.

In defense of Bitcoin mining’s environmental effects, Adam O of Upstream Data said, “Good luck demonizing anything which benefits all stakeholders, lowers waste, and lowers methane emissions. Mission dumbest of the decade Swan Bitcoin’s Head of Private Clients & Family Offices, Steven Lubka, chastised Kerrisdale’s approach, citing their diminishing assets under management and the failing MicroStrategy (MSTR) short position, which they entered two months prior, as indicators of more serious problems within the company.

“Look at these complete losers who are pleading with the government to use FUD to undermine mining to save their MSTR short.” […] Let us now examine their AUM. $318 million as of this quarter; how about a couple of years ago? $1.3 billion. Their entire AUM, or amount invested, has dropped significantly. In summary, they are attempting to preserve their capital because they anticipate that MSTR will increase its value through government appeals.

The benefits of Bitcoin mining for the environment were also discussed. An angel investor named Simon Dixon dispelled the misconception that mining Bitcoin is primarily bad for the environment by presenting data. He emphasized how Bitcoin mining helps reduce methane emissions, works well with other renewable energy sources like solar and wind power, and can help stabilize the system.

“You will make a higher ROI + more friends by buying and holding Bitcoin,” said Bitcoin educator Mark Harvey.

BTC was trading at $70,820 at the time of publication.