Riot Platforms (RIOT), a prominent Bitcoin mining company, saw its stock decline on Wednesday after well-known short-seller Kerrisdale Capital announced its short position on RIOT and long position on Bitcoin (BTC).
In a post on X, Kerrisdale criticized Riot’s business model, describing it as a “dysfunctional hamster wheel of cash burn.” The firm argued that Riot, like other U.S.-listed miners, relies heavily on continuous ATM issuance to fund its operations, which they claim is detrimental to retail shareholders. Kerrisdale further noted that even with Bitcoin near its all-time highs, Riot’s mining operations are unprofitable, especially in the post-halving environment.
Kerrisdale’s strategy includes holding Bitcoin as a hedge against their short position in Riot. This dual approach underscores their belief in Bitcoin’s long-term potential while expressing skepticism about the mining firm’s financial health. On the day of the announcement, Riot’s shares fell more than 6%, marking one of the worst performances among crypto-related stocks, despite Bitcoin’s price rising.
This development comes just a week after Riot initiated a hostile takeover bid for Bitfarms (BITF), acquiring a 9.25% stake to become its largest shareholder. Riot’s aggressive move in the industry highlights its expansion ambitions, even as it faces scrutiny over its financial practices.