Bitcoin mining company Riot Platforms (RIOT) experienced a decline in its stock price on Wednesday, June 5, 2024, following an announcement by the short-selling firm Kerrisdale Capital.
Earlier in the day, the stock dropped 9.6% to $8.84 within the first hour of trading on the Nasdaq. RIOT’s stock continued to fall, slipping 0.73% to $9.58 at some point. It eventually closed the day at $9.65, a 0.21% decrease from its starting price, according to Google Finance.
The drop appears to be triggered by Kerrisdale’s report, released just minutes before the market opened. In the report, the investment firm revealed it was shorting RIOT while holding a long position on Bitcoin (BTC).
In an accompanying post on X, the firm announced it was initiating “a war against Bitcoin miners, an industry of snake oil salesmen.” The firm argued that Riot, similar to other U.S.-listed mining companies, relies excessively on continuous ATM (at-the-market) issuance to fund operations, a practice they believe harms retail investors.
It also pointed out that despite Bitcoin trading near its all-time highs, Riot’s mining operations remain unprofitable, especially following Bitcoin’s halving events.
Kerrisdale stated that though it was shorting the company’s stock, it was holding a long position on Bitcoin as a hedge against its short position in Riot. The firm appears to be in sync to popular sentiment which anticipates a rise in the token’s price.
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This is not Kerrisdale’s first move against a crypto-related company. On March 28, they targeted MicroStrategy (MSTR), a firm known for holding substantial amounts of Bitcoin.
Kerrisdale suggested that investors would be better off investing in Bitcoin ETFs to gain exposure to the cryptocurrency than in the company. Despite the criticism, Microstrategy’s stock showed resilience, closing at $1,704.56 on the day of the report and slightly declining to $1,694.69, while maintaining a year-to-date gain of over 147%, as per Google Finance.
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