Riot Platforms Shares Drop After Kerrisdale Bearish Report

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As a long-term crypto investor with a background in financial analysis, I’ve seen my fair share of market volatility and industry disruptions. The recent pessimistic report on Riot Platforms by Kerrisdale Capital has left me concerned about the future of this Bitcoin miner.

The stock price of Riot Platforms, Inc. has decreased following the publication of a critical report on the company by Kerrisdale Capital, which is led by Sahm Adrangi as its Founder and Chief Investment Officer.

The price of Riot Platforms’ shares dropped by 6.93%, landing at $9.00, in response to a bearish analysis published by Kerrisdale Capital regarding the Bitcoin mining company.

Expert: Adrangi expressed pessimistic views regarding Riot Platforms, a Bitcoin miner valued at $3 billion, which focuses more on energy price differences (arbitrage) and stock offerings instead of creating value for shareholders by directly mining cryptocurrencies.

As a researcher studying the financial landscape of public companies involved in Bitcoin mining, I’ve come across an intriguing perspective from Kerrisdale analysts. They argue that Bitcoin mining isn’t an ideal business model due to several challenging factors.

As a researcher examining Riot’s recent financial developments, I’ve come across some noteworthy information. Riot has sold over $507 million worth of its stock in April – representing a 18% dilution. This figure includes a latest issuance that mirrors the current stock price. Adrangi, an influential investor, urges shareholders to ponder on why management finds it advantageous to offload Riot shares and instead hold Bitcoin. It’s essential for us as investors to consider this perspective and assess its implications on our own investment strategies.

Today marks our crusade against Bitcoin mining operators, a questionable business sector filled with charlatans who are recklessly depleting investor funds and the environment. It’s high time we take decisive action, much like how we effectively combated Chinese RTO scams a decade past (1/10).

— Kerrisdale Capital (TradFi) (@KerrisdaleCap) June 5, 2024

As an analyst, I’ve observed that Bitcoin miners, including Riot, were initially attracted to Texas due to its affordability in electricity costs and lenient regulatory environment. However, my expertise warns me that the initial excitement or honeymoon phase may have passed. With growing concerns about environmental impacts and externalities, there has been a heightened focus on supervising and legislating Bitcoin mining activities in Texas. This increased scrutiny could potentially reduce financial incentives for miners.

As a research analyst examining the riot investor scene, I’ve observed an intriguing trend: these investors seem unfazed by political and regulatory developments ahead of another summer. Their focus remains on Texas’ vulnerable electric infrastructure, which is set to face rigorous testing once again.

With Bitcoin miners currently experiencing reduced profits due to the latest block reward reduction, upcoming production data and Q2 reports will provide investors with a more definitive view of the industry’s struggling economy, which raised concerns even before this change took effect. (Source: Analyst)

Adrangi pointed out that low-cost exchange-traded funds (ETFs) and exchange-traded products (ETPs) expand the avenues for investors to gain Bitcoin exposure. Over the past year, Riot Platforms experienced a 16% decline in value. For those looking to invest in the stock, consider the Global X Blockchain ETF or Fidelity Crypto Industry and Digital Payments ETF as alternative options.

In simpler terms, the corporation expressed that, similar to other publicly traded mining companies, RIOT’s business model operates like a broken wheel for hamsters, constantly requiring cash infusions through continuous share offerings to keep running. Despite Bitcoin reaching new peak prices post-halving, RIOT’s mining operations remain unprofitable.

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2024-06-05 22:12