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Crypto Miner RIOT Targeted by Short-Seller Kerrisdale

According to Kerrisdale, spot bitcoin ETFs and BTC are stronger investments than any miner.

Author

Dillon Newman
June 05, 2024 • Estimated Reading Time: 2 minutes

Shares of crypto miner Riot Platformers (RIOT) fell as much as 8.9% before recovering a bit today on the release of a short report from Kerrisdale Capital. The report comes only a week after RIOT announced a bid to take over competitor Bitfarms (BITF).

According to Kerrisdale, spot bitcoin ETFs and BTC are stronger investments than any miner. Combine that with the fact that

Kerrisdale is no newcomer to shorting crypto-focused companies, having put on a long BTC short Microstrategy (MSTR) trade in March.

While Kerrisdale is short RIOT specifically, believing it to be the worst of the market, founder Sahm Adrangi thinks the whole industry is flawed, stating:

Bitcoin mining is easily among the worst business models for a public company we have ever encountered: unpredictable revenue, capital intensive, extremely competitive, a pure commodity product, and lately drawing intense regulatory scrutiny even in crypto-friendly places like Texas where Riot has 100% of its bitcoin production

While the mining market may be difficult, there is a lot of potential for these miners – with their large data centers – to pivot, especially into AI. A case in point is Core Scientific (CORZ), which soared 40% this week after announcing a partnership with cloud provider CoreWeave.

After the announcement, CoreWeave reportedly offered to purchase Core Scientific for $1 billion – a 55% premium.