Kerrisdale Capital filed a complaint against crypto miner Riot Platforms with Texas officials, citing safety hazards and concerns about equipment imported from China.

On June 5, Kerrisdale addressed the complaint in a letter to Navarro County Texas Judge H.M. Davenport Jr. and four commissioners. The complaint referenced a former operations specialist at Riot’s Rockdale facility who reported dangerous spills, unsafe electrical equipment, and a lack of protective gear, claiming management ignored these safety concerns.

Kerrisdale also highlighted that in 2022, Riot used ExxonMobile’s Spectrasyn 2C as an immersion coolant, which ExxonMobile does not recommend for data centers. They urged officials to verify the current coolant used at Riot’s Rockdale and Corsicana centers, as ExxonMobile has since released products designed for data center use.

Kerrisdale raised doubts about a $453 million agreement for mining equipment from Chinese manufacturer MicroBT. Riot claimed this would create jobs in Pennsylvania, but Kerrisdale, based on images, alleged the facilities in the US were assembling parts imported from China. They added that MicroBT’s US manufacturer, Synos Corp., is highly automated with few skilled positions, suggesting the main goal was to bypass import tariffs rather than create US jobs.

Kerrisdale disclosed a conflict of interest, noting a short position on Riot’s stock, which would benefit if the stock’s value drops.

In a separate report, Kerrisdale criticized Bitcoin mining as “easily among the worst business models” and claimed Riot has never produced positive cash flows. They also commented on the strain mining puts on Texas's electrical grid, warning of potential issues with increased summer demand linked to air conditioner use, which could drive up prices.

Earlier this year, Texas faced another mining-related issue when the Texas Blockchain Council (TBC) and Riot contested an executive order requiring detailed energy use reporting from mining firms. The survey was largely halted by March.