Kerrisdale Capital, an investment management firm, has launched a scathing attack on the Bitcoin mining industry in the United States, branding it a haven for “snake oil salesmen” that devour investor capital and harm the environment.

In a post on X, the management firm announced that it had started its war on the burgeoning industry by drafting two letters to Texas authorities.

One is addressed to the Navarro City Commission, where Riot Blockchain has set up its base. Another letter was sent to the Texas state senators.

The investment firm is urging them to crack down on Bitcoin mining in the state, comparing it to the fraudulent Chinese schemes exposed a decade ago.

What stands out is that their fight will be centered on Bitcoin mining operations in Texas. Considering its low energy costs, the state is a major hub for Bitcoin mining in the United States.

If anything, their opposition to Bitcoin mining has led Kerrisdale Capital to disclose that they are actively shorting Riot Blockchain’s stock. The investment firm thinks the mining farm is a “prime example of a dysfunctional Bitcoin mining business model” trapped in “a vicious cycle of cash burn.”

In their assessment, these public mining firms mostly rely on continuously issuing new shares to fund operations, even when Bitcoin is at or near all-time highs. The investment firm argues this is a sign of a flawed business model.

Kerrisdale Capital also pointed out profitability issuers for these Bitcoin mining operations, even when prices are at record levels. In these cycles, they claim that Riot Blockchain has struggled to be in green. Beyond this, they cite environmental concerns and increasing regulatory scrutiny surrounding mining.

Additionally, they think the availability of spot Bitcoin exchange-traded funds (ETFs) means owning shares of mining farms is an unnecessary risk. Over the last six months, spot ETF issuers in the United States have bought billions worth of BTC on behalf of their clients.

As expected, the attack has sparked outrage. Bob Burnett, the founder of Barefoot Mining, has vehemently rejected the “snake oil salesman” label, emphasizing the dedication and hard work of securing the network.

Of note, the founder points to the resilience of many mining companies during challenging market conditions and their role in maintaining the integrity of the broader ecosystem.

Even with the criticism, Mempool.Space data shows that the total hash rate remains high and steady at over 500 EH/s when writing. At the same time, even after Halving, Foundry USA remains the largest mining farm in the world by hash rate.

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