Riot shares saw a recovery on June 5 after a report from short seller Kerrisdale Capital was released. The report accused Riot of mismanagement and predicted the firm’s collapse, calling Bitcoin miners “snake oil salesmen.” Kerrisdale declared a “war” against Bitcoin miners, criticizing their impact on investor capital and the environment.
Following the report, RIOT shares initially dropped but eventually closed down slightly. Kerrisdale criticized Riot for burning cash and diluting shareholder value through stock issuance. The report pointed out challenges faced by Riot, such as regulatory scrutiny in Texas and competition from more efficient global miners.
Kerrisdale questioned the value of investing in Bitcoin mining companies like Riot compared to owning Bitcoin directly or investing in low-fee ETFs. The firm warned of a potential valuation collapse for Riot and similar companies due to regulatory pressure and skepticism about their business models.
This is not the first time Kerrisdale has targeted companies in the cryptocurrency space. Previously, the firm criticized MicroStrategy, advocating for investments in spot Bitcoin ETFs over holding shares in BTC-holding firms.