Bitcoin investors unimpressed with Kerrisdale Capital report on Riot Platforms

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—by Protos Staff

Kerrisdale Capital’s Sahm Adrangi, who has been earning something of a reputation in the crypto industry, has short-sold Riot Platforms (NASDAQ:RIOT). RIOT was trading at $9.85 per share when Adrangi tweeted a couple minutes prior to NASDAQ’s 9:30am open. Within an hour, it had dropped 10% to $8.84. 

The move seemed to vindicate the privileged, Miami Beach-based fund manager, whose aggressive media appearances have given the crypto community little reason to support him. Indeed, until now, he’s perhaps best known for making a few million dollars flipping a mansion and getting arrested at 3am in the Hamptons on charges of driving while drunk and high on cocaine.

Adrangi’s initial capital came mostly from his family, with a New York Magazine profile revealing that he started in 2009 with “$300,000 of his and his parents’ money.”

On Wednesday, he equated his unremarkable stock trade to “a war against bitcoin miners” and called the workers who secure the world’s most important blockchain “an industry of snake oil salesmen that are incinerating both investor capital and the environment.”

Read more: Is Tether becoming Bitcoin’s most influential miner?

Critics respond to Kerrisdale Capital report on Riot Platforms

Critics have labeled Adrangi a Karen and laughed at his fund’s underperformance. They highlighted his losing trades, such as his short-sale of Uranium Energy Corporation on March 23, 2023, which has doubled in price since he bet against the company.

In his report, Adrangi wrote that “Riot incinerates cash” and correctly noted that it has “increased its shares outstanding 6-fold” via dilutive share offerings. Because Riot has diluted its shares, its price has declined 43% year-to-date despite bitcoin itself rallying 60%. Adrangi predicts that Riot will continue to dilute shareholders indefinitely.

Life at Kerrisdale is full of contradictions.

Bitcoin miners responded to some of the allegations in Kerrisdale Capital’s report. A miner who worked inside Riot’s Rockdale mine debunked Adrangi’s safety concerns around fluid flammability and arc flashes and called Adrangi’s complaints about the company’s receipt of Texan government subsidies via ERCOT ​​naïve. Overall, the miner predicted Kerrisdale would lose money on its short-sale.

After the first hour of trading down in response to the report, Riot shares steadily recovered. As of pre-market trading on Friday, the stock was back to $9.49 — barely changed from the initial report and well within the range of the past 30 days.

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