Key Points
- Kerrisdale Capital, a hedge fund, predicts Bitcoin miner Riot Platform’s shares will become worthless.
- The fund believes Bitcoin will always perform better than Bitcoin miner shares.
Kerrisdale Capital, a traditional finance hedge fund, has revealed a new short strategy aimed at Bitcoin miner Riot Platform’s shares. The fund’s CIO Sahm Andrangi expressed his belief that the sector will disappear in five years.
Bitcoin Mining Sector Criticized
On social media, the hedge fund criticized Riot, calling it a ‘dysfunctional hamster’ and claiming that it is unable to offer better rewards to shareholders. Andrangi also criticized the entire Bitcoin mining sector, calling it the ‘stupidest business model’ and predicting that it will ‘ultimately go to zero.’
Despite the bearish outlook, Kerrisdale Capital maintains that Bitcoin will always outperform Bitcoin miner shares. The fund suggests using Bitcoin as a hedge against Bitcoin miner shares. However, since the fund’s last short strategy against MicroStrategy’s stock in March, the stock has risen by 37%.
Market Reaction
This has led some market observers to adopt a contrarian approach and thank the fund for calling Bitcoin miners’ shares ‘bottom’ for the rest of 2024. Another social media user questioned the fund’s strategy. On a year-to-date basis, MSTR was up 147%, and Bitcoin had 67% gains at the time of writing. However, Riot was down 37%, while the overall Bitcoin miner shares tracker, based on Valkryie Bitcoin Miner ETFs (WGMI), was only up 6% over the same period. The future of the hedge fund’s ‘Bitcoin miners going to zero’ projection remains uncertain.
