Riot Platforms Faces Criticism from Kerrisdale Capital, Calls for Leadership Changes at Bitfarms

Riot Platforms has made significant investments in acquiring a 13.1% stake in Bitfarms, but faces harsh criticism from Kerrisdale Capital, which has called Bitcoin mining “an industry of snake oil salesmen.” Kerrisdale’s CEO, Sahm Adrangi, argues that U.S. Bitcoin mining businesses are “structurally unprofitable,” citing Riot’s issuance of $41 million in shares in the first four months of 2024 as an example of stock dilution to sustain a non-viable business model, according to Cointelegraph.

Despite Kerrisdale’s claims, Riot refutes these accusations, asserting that their ambitious growth plans for 2024 will demonstrate the inaccuracies in Kerrisdale’s report. Riot’s stock, affected by the report, saw an 8.9% drop but has since stabilized around $10.

Riot has also urged Bitfarms’ board to remove Chairman and Interim CEO Nicolas Bonta, accusing him of poor corporate governance. This request comes in the wake of Bitfarms’ adoption of a poison pill strategy to fend off Riot’s takeover attempts.

Meanwhile, Bitfarms announced a significant expansion plan in the U.S. The company will develop a 120 MW power capacity site in Sharon, Pennsylvania, aiming to increase its total power capacity to 648 MW by 2025, up 170% from the current 240 MW. This new site will support 8 EH/s by 2025, aligning with Bitfarms’ goal of achieving over 35 EH/s.

Ben Gagnon, Chief Mining Officer of Bitfarms, emphasized the benefits of participating in PJM’s demand response programs to earn additional revenue and support grid reliability. Philippe Fortier, SVP of Corporate Development, highlighted the strategic advantage of accessing low-cost U.S. energy and flexible power trading options in the PJM market.

Kerrisdale’s critique extends beyond Riot, suggesting that the entire U.S. Bitcoin mining industry faces significant challenges due to energy consumption and regulatory scrutiny. However, proponents like William Foxley of The Mining Pod argue that the industry’s prospects remain strong, especially with political support from figures like Donald Trump, who has recently expressed strong advocacy for Bitcoin mining.

As the debate continues, Riot’s and Bitfarms’ strategies and market movements will be closely watched by industry stakeholders and investors.