Kerrisdale Capital shorts Riot stock amid complaints about miner’s safety hazards, China imports


Kerrisdale
Capital
sent
a
complaint
about
crypto
miner

Riot
Platforms
to
Texas
officials
over
concerns
related
to
safety
hazards
and
equipment
imported
from
China

The
company
made
the
complaint
in
a
on

June
5
letter
addressed
to
Navarro
County
Texas
Judge
H.M.
Davenport
Jr.
and
four
commissioners.

Kerrisdale
cited
a
former
operations
specialist
at
Riot’s
Rockdale
facility
who
described
dangerous
spills,
unsafe
electrical
equipment,
and
a
lack
of
protective
equipment
use.

The
former
employee
said
that
management
did
not
care
about
his
safety
concerns.

Kerrisdale
noted
that
in
2022,
Riot
used
ExxonMobile’s
Spectrasyn
2C
as
an
immersion
coolant,
a
product
that
ExxonMobile
does
not
list
for
use
in
data
centers.

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It
said
ExxonMobile
has
since
launched
products
aimed
at
data
center
use
and
urged
officials
to
determine
which
coolant
Riot
currently
uses
at
its
Rockdale
and
Corsicana
centers.

US
manufacturing
claims
questionable

Kerrisdale
also
raised
concerns
about
a
$453
million
purchase
agreement
for
mining
equipment
from
the
Chinese
manufacturer
MicroBT.

Riot
allegedly
claimed
that
the
purchase
would
create
jobs
because
Pennsylvania
facilities
would
manufacture
the
mining
devices.
However,
based
on
images
obtained
by
Kerrisdale,
the
US
facilities
assembled
parts
imported
from
China.

Kerrisdale
added
that
MicroBT’s
US
manufacturer,
Synos
Corp.,
is
highly
automated
and
has
few
positions
for
highly
skilled
workers.
It
alleged
that
MicroBT
primarily
intends
to
bypass
import
tariffs
rather
than
employ
US
workers
through
Synos.

Kerrisdale
disclosed
a
conflict
of
interest
on
all
issues,
stating
that
it
has
taken
up
a
short
position
on
Riot’s
stock
and
will
realize
gains
if
Riot
stock
decreases
in
value.

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Texas
energy
grid

In
a
separate
investment
report,
Kerrisdale
criticized
Bitcoin
mining
more
broadly,
calling
it
“easily
among
the
worst
business
models”
and
alleged
that
Riot
has
never
produced
positive
cash
flows.

The
company
also
commented
on
mining’s
impact
on
the
Texas
electrical
grid,

writing:

“We
believe
Riot
investors
are
oblivious
to
shifts
in
state
and
local
politics
and
headline
risk
as
we
approach
another
summer
which
will
test
Texas’
fragile
electric
grid.”

Kerrisdale
linked
a
Dallas
Morning
News
report
stating
that
heightened
summer
demand
is
linked
to
air
conditioner
use.
Prices
are
expected
to
rise
over
the
summer.

Texas
was
the
subject
of
another
mining
and
energy-related
issue
earlier
this
year.
In
February,
the
Texas
Blockchain
Council
(TBC)
and
Riot

challenged
an
executive
order
that
would
have
required
mining
firms
throughout
the
US
to
report
energy
use
in
detail.

The
government
agencies

largely
halted
the
survey
by
March.

Mentioned
in
this
article
Posted
In:

US,

Mining

Go to Source
Author: Mike Dalton


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