Kerrisdale Capital shorts Riot inventory amid complaints about miner’s security hazards, China imports

Kerrisdale Capital despatched a grievance about crypto miner Riot Platforms to Texas officers over considerations associated to security hazards and tools imported from China

The corporate made the grievance in a on June 5 letter addressed to Navarro County Texas Choose H.M. Davenport Jr. and 4 commissioners.

Kerrisdale cited a former operations specialist at Riot’s Rockdale facility who described harmful spills, unsafe electrical tools, and a scarcity of protecting tools use.

The previous worker mentioned that administration didn’t care about his security considerations.

Kerrisdale famous that in 2022, Riot used ExxonMobile’s Spectrasyn 2C as an immersion coolant, a product that ExxonMobile doesn’t listing to be used in information facilities.

It mentioned ExxonMobile has since launched merchandise geared toward information heart use and urged officers to find out which coolant Riot at the moment makes use of at its Rockdale and Corsicana facilities.

US manufacturing claims questionable

Kerrisdale additionally raised considerations a couple of $453 million buy settlement for mining tools from the Chinese language producer MicroBT.

Riot allegedly claimed that the acquisition would create jobs as a result of Pennsylvania amenities would manufacture the mining gadgets. Nevertheless, primarily based on pictures obtained by Kerrisdale, the US amenities assembled components imported from China.

Kerrisdale added that MicroBT’s US producer, Synos Corp., is extremely automated and has few positions for extremely expert staff. It alleged that MicroBT primarily intends to bypass import tariffs reasonably than make use of US staff via Synos.

Kerrisdale disclosed a battle of curiosity on all points, stating that it has taken up a brief place on Riot’s inventory and can understand beneficial properties if Riot inventory decreases in worth.

Texas power grid

In a separate funding report, Kerrisdale criticized Bitcoin mining extra broadly, calling it “simply among the many worst enterprise fashions” and alleged that Riot has by no means produced constructive money flows.

The corporate additionally commented on mining’s influence on the Texas electrical grid, writing:

“We imagine Riot traders are oblivious to shifts in state and native politics and headline danger as we strategy one other summer season which can check Texas’ fragile electrical grid.”

Kerrisdale linked a Dallas Morning Information report stating that heightened summer season demand is linked to air conditioner use. Costs are anticipated to rise over the summer season.

Texas was the topic of one other mining and energy-related problem earlier this yr. In February, the Texas Blockchain Council (TBC) and Riot challenged an executive order that will have required mining corporations all through the US to report power use intimately.

The federal government businesses largely halted the survey by March.