Investment Firm’s Attack on Bitcoin Mining Industry
An investment management firm, Kerrisdale Capital, has launched a scathing attack on the Bitcoin mining industry in the United States. They have labeled it as a haven for “snake oil salesmen” that consume investor capital and harm the environment.
Firm Launches War on Bitcoin Mining in Texas
Kerrisdale Capital has started its battle against the Bitcoin mining industry by drafting two letters to Texas authorities. One letter was addressed to the Navarro City Commission, where Riot Blockchain has its base, while another was sent to the Texas state senators.
- The firm is urging Texas authorities to crack down on Bitcoin mining operations in the state.
- They compare the activities to fraudulent Chinese schemes exposed a decade ago.
Concerns Over Bitcoin Mining Business Model
Kerrisdale Capital’s opposition to Bitcoin mining has led them to disclose that they are actively shorting Riot Blockchain’s stock. They see the mining farm as a “prime example of a dysfunctional Bitcoin mining business model” trapped in “a vicious cycle of cash burn.”
- The firm argues that public mining firms rely on continually issuing new shares to fund operations, even when Bitcoin prices are high.
- They believe this flawed business model leads to profitability issues, environmental concerns, and regulatory scrutiny.
Risk of Owning Mining Shares
Kerrisdale Capital also points out that the availability of spot Bitcoin exchange-traded funds (ETFs) makes owning shares of mining farms an unnecessary risk. They highlight how spot ETF issuers in the United States have bought billions worth of Bitcoin on behalf of their clients over the last six months.
- They believe owning shares of mining farms poses unnecessary risks given the availability of spot Bitcoin ETFs.
- Spot ETF issuers in the US have purchased billions of Bitcoin on behalf of their clients recently.
Miners Defend Industry, Network Strengthens
The attack on the Bitcoin mining industry has sparked outrage, with figures like Bob Burnett, the founder of Barefoot Mining, rejecting the “snake oil salesman” label. He emphasizes the dedication and hard work that goes into securing the network.
Resilience in Challenging Market Conditions
Despite the criticism, mining companies have shown resilience in challenging market conditions and have played a crucial role in maintaining the integrity of the broader ecosystem.
- Many mining companies have demonstrated resilience in challenging market conditions.
- They play a vital role in maintaining the integrity of the broader ecosystem.
Steady Hash Rate Despite Criticism
Even with the backlash, data from Mempool.Space shows that the total hash rate remains high and steady at over 500 EH/s. Foundry USA continues to be the largest mining farm in the world by hash rate, even after Halving.
- The total hash rate remains high and steady at over 500 EH/s.
- Foundry USA remains the largest mining farm globally by hash rate.
Hot Take: The Future of Bitcoin Mining Industry
The debate between investment firms like Kerrisdale Capital and Bitcoin mining industry players like Barefoot Mining highlights the contrasting views on the industry’s future. While the former raises concerns about the sustainability of the mining business model, the latter emphasizes the industry’s resilience and importance in securing the network.
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