At Extreme Investor Network, we pride ourselves on providing unique and valuable insights into the world of finance. Today, we want to discuss the recent short sell report targeting Riot Platforms, Inc (NASDAQ: RIOT) by Kerrisdale Capital’s Founder and Chief Investment Officer, Sahm Adrangi.
In the report, Adrangi expressed a bearish view on Riot Platforms, a $3 billion Bitcoin miner. He highlighted that the company excels more in energy arbitrage and stock issuance than in generating shareholder value through crypto mining. Adrangi pointed out the challenges of Bitcoin mining as a business model for a public company, including unpredictable revenue, high capital requirements, fierce competition, and increasing regulatory scrutiny.
One interesting point brought up in the report is the fact that Riot Platforms has never produced positive cash flow or a decent return. Adrangi questioned the excessive management compensation and frequent dilution of shares by the company. He highlighted that Riot has issued over $507 million in stock through April alone, leading to shareholder dilution.
Adrangi also mentioned that the honeymoon period for Bitcoin miners in Texas, where Riot operates, is coming to an end. The state is facing increased regulatory oversight and legislation that could limit financial incentives for miners. As the industry faces profitability cuts, investors now have better options for Bitcoin exposure with low-fee ETFs and ETPs.
Despite these challenges, Riot Platforms lost 16% in the last 12 months. Investors looking to gain exposure to the stock can consider options like the Global X Blockchain ETF (NASDAQ: BKCH) and Fidelity Crypto Industry And Digital Payments ETF (NASDAQ: FDIG).
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