#Riot #Bitcoin #KerrisdaleCapital #Cryptocurrency #StockMarket #ShortSellers #EnvironmentalImpact #RegulatoryScrutiny
Riot Blockchain’s shares witnessed a significant comeback on June 5 after a tumultuous start to the trading day, triggered by a damning report from short-seller Kerrisdale Capital. Before the market opened, Kerrisdale released a report through which it castigated Riot for its alleged mismanagement and boldly predicted the company’s downfall. The report described Bitcoin miners like Riot as purveyors of “snake oil,” accusing them of both environmental harm and squandering investor funds.
The short-seller’s accusations were incendiary, portraying Riot Blockchain as a company more adept at exploiting energy pricing discrepancies and capitalizing on stock issuances than in creating value through cryptocurrency mining. Kerrisdale didn’t mince words, comparing Bitcoin miners to fraudulent entities and asserting that they should be ousted from the American market. This bold declaration, coupled with detailed financial criticisms, initially sent Riot’s stock plunging by 9.6%. However, the stock recovered throughout the day, closing nearly flat and then inching upwards in subsequent trading sessions, defying Kerrisdale’s grim forecast.
Kerrisdale’s critique extends to Riot’s operational model, highlighting a business approach reliant on diluting shareholder value through incessant stock offerings. Since 2020, Riot has seen its shares increase sixfold, raising concerns about the long-term sustainability of its financial strategy. The short seller also pointed out several external pressures challenging Riot, from regulatory scrutiny in Texas to the inherently competitive nature of Bitcoin mining. Despite these challenges, Riot’s approach has been questioned, especially when compared to the potentially simpler and more cost-effective method of directly investing in Bitcoin or Bitcoin-related ETFs. Kerrisdale’s skepticism extends to the broader Bitcoin mining industry, predicting a grim outlook for companies like Riot in the face of regulatory pressures and increased investor skepticism towards the business model’s viability. This report, while not the first attack by Kerrisdale on the cryptocurrency sector, underscores the contentious debate surrounding the value and sustainability of Bitcoin mining operations amidst growing environmental and regulatory concerns.
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