It emerged after reports that the Riot platform had crashed.
Shares in Riot Platforms Inc (RIOT) bounced back from a sharp decline on June 5 after a strong-worded report from short seller Kerrisdale Capital said the company would collapse and that Bitcoin (BTC) miners were selling “snake oil.”
Kerrisdale's June 5 report said Riot would “do a better job playing power arbitrage games and issuing shares than generating shareholder value through mining.”
In an accompanying post on X, the organization added that it was launching a “war on Bitcoin miners, an industry of snake oil sellers.” He revealed that he was betting against the company but was long Bitcoin – a bet that the price would go up.
RIOT shares recovered 0.21% at $9.65, recovering from a 9.6% drop to $8.84 in the early hours of New York trading. The report came out 2 minutes before the Nasdaq opened.
It is now down 0.73% in afternoon trading, to $9.58 on Google Finance.
A Riot spokesperson told Cointelegraph that it disagrees with Kerisdale's “characterization of the Bitcoin mining industry and Riot and the inaccurate conclusions reached in the Kerisdale Capital report.”
“We believe these errors will be reflected in the execution of our 2024 growth plans and the resulting financial performance.”
Shareholders “Regret Not Just Buying Bitcoin”
Kerisdale's short auction research paper focuses on allegations that Riot is burning through cash and that it is “only preying on retail shareholders by steadily diluting its balance sheet.”
Since 2020, Riot's shares have increased sixfold.
“If Riot stops issuing shares, it will be forced to start drawing on cash and Bitcoin holdings,” he wrote.
The crypto miner cited growing threats from regulators in Texas, where Riot operates, halving revenue from Bitcoin and global competition in the mining market with cheaper competitors.
RELATED: Bitcoin's Decline Despite New Facility Affects Miner Ryot's Revenue by 43%
RIOT, once considered a “Bitcoin proxy” according to Kerrisdale, also now competes with “many low-fee” Bitcoin exchange-traded funds (ETFs).
“In a company like Riot, which has seen Bitcoin holdings per share and Bitcoin production per share steadily decline, why is the company's stock, and simply owning Bitcoin,” the company asked.
“In the long run, its true character is as a basic manufacturing company whose only competitive advantage is that it can produce more shares on demand, disappointing shareholders who only regret buying bitcoin.”
Bitcoin rose 0.4% in 24 hours to trade at $71,022, according to Cointelegraph Markets Pro.
On March 28, Kerisdale took a similar shot at Bitcoin-holding firm MicroStrategy ( MSTR ), saying it was better to hold Bitcoin ETFs instead for exposure to the cryptocurrency.
MSTR closed at $1,704.56 on the reporting date, down just 0.58% since then — closing at $1,694.69 today, but still up more than 147% year-to-date, according to Google Finance.
Magazine: Bitcoin on a Collision Course with ‘Net Zero' Promises
