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.
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.
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.
