TLDR

Table of Contents

BitMine holds 2.83 million ETH valued at over $12.5 billion.
Kerrisdale pins ETH per 1,000 shares of BitMine at 9 tokens.
BitMine stock ended Tuesday up 1.35% despite early decline.
The company raised $10 billion in 3 months through share sales.

Shares of BitMine Immersion Technologies experienced volatile trading following a short report by Kerrisdale Capital. The stock ended the day slightly up, despite a sharp drop earlier in the session. Kerrisdale raised concerns over BitMine’s strategy of issuing stock to acquire Ether (ETH), claiming it is no longer effective or sustainable.

Kerrisdale Questions BitMine’s Business Model

Kerrisdale Capital released a report targeting BitMine, calling its business model outdated. The firm took a short position, expecting the stock price to fall. According to Kerrisdale, BitMine’s approach of selling shares at a premium to buy ETH and increase its tokens-per-share ratio no longer works in the current market.

BitMine, originally a Bitcoin mining company, shifted its focus to Ethereum. It now holds 2.83 million ETH worth over $12.5 billion, making it the largest public holder of the token. Kerrisdale stated that BitMine now has about 9 ETH per 1,000 shares, but its value relative to its crypto holdings is narrowing.

The report added, “BitMine’s strategy needs scarcity, charisma, and something more innovative. The company offers none of these.” BitMine did not respond to the report at the time of publication.

Stock Shows Volatility but Ends with Gains

Following the release of Kerrisdale’s report, BitMine’s stock opened above $60 but dropped over 5% to a low of $57.41. However, it later recovered and closed the day at $60, posting a 1.35% gain. After-hours trading added another 0.4% to the share price.

The report caused brief investor uncertainty, but some market participants seemed to hold confidence in BitMine’s crypto holdings. BitMine is one of several crypto treasury firms that buy large quantities of digital assets to attract investor interest.

Kerrisdale has previously criticized other crypto firms like Riot Platforms and Strategy. While Riot responded to defend its position, Strategy did not comment. Strategy Chair Michael Saylor has continued promoting the company to investors.

Share Issuance Rate Raises Concerns

Kerrisdale also pointed out BitMine’s aggressive pace of stock issuance. Over the past three months, the firm raised $10 billion through at-market share sales. Kerrisdale claimed the $365 million offering in September was highly dilutive and hurt investor trust.

The report said, “The sheer velocity of BMNR’s stock issuance has turned early enthusiasm into fatigue.” It noted that investors now expect each stock rally to result in more supply entering the market.

The firm argued that the company’s rising capital raises have not been matched by growth in ETH per share. Kerrisdale also said BitMine no longer reports its net asset value per share, which raises concerns among investors.

Leadership and Transparency Under Scrutiny

Kerrisdale also questioned the leadership of Tom Lee, BitMine’s executive chair. While acknowledging his name recognition, the firm argued he lacks the influence of figures like Michael Saylor. The report stated that Lee does not inspire the same investor confidence that allowed Strategy to issue equity without losing enthusiasm.

BitMine’s competition is also increasing. Many companies are now using a similar model, which Kerrisdale called “generic.” It claimed that the company’s disclosures have become harder to follow and that the premium investors once paid for BitMine is shrinking.

The report concluded that buying ETH directly or through ETFs offers better value than investing in BitMine at a market premium.