Tom Lee's BitMine Posts $3.8 Billion Quarterly Loss Due to Ethereum Price Plunge
TL;DR
BitMine reported a net loss of over $3.8 billion for the quarter ending in February, primarily due to unrealized losses from Ethereum. Despite a slight increase in shares, the company's stock has dropped nearly 60% over the past six months.
Key points
- BitMine posted a net loss of over $3.8 billion in Q1
- Losses largely attributed to unrealized Ethereum holdings
- Shares of BMNR have dropped nearly 60% in six months
Mentioned in this story
In brief
- BitMine posted a net loss of more than $3.8 billion during the three-month stretch ending in February.
- The firm attributes most of the losses to the unrealized or paper losses mounting from its Ethereum holdings.
- Shares of BMNR are up about 1% on Wednesday, but have slid nearly 60% in the last six months.
Leading Ethereum treasury firm BitMine Immersion Technologies lost more than $3.8 billion in the quarterly period ending on February 28, according to a new 10-Q the firm filed with the SEC on Tuesday.
The firm’s net loss figure of $3.81 billion was largely driven by mounting unrealized losses from its Ethereum holdings, which accounted for nearly 99% of the firm’s reported losses. Over a longer timeframe, the losses are even greater, extending beyond $9 billion in the six-month span ending in February.
“Our operating model is now anchored by our ETH treasury strategy and capital-light ecosystem services,” the firm wrote, adding that “ETH market conditions, which affect the value of our holdings and the economics of any staking or staking-adjacent activities,” are now a key driver of its results.
The firm also posted an unrealized loss of around $21 million for its investment in Eightco (ORBS), a Worldcoin treasury firm that also provides investors exposure to private artificial intelligence giant and ChatGPT maker, OpenAI. (Disclosure: BitMine Chairman Tom Lee is an investor in Dastan, Decrypt's parent company.)
All in, the results have soured substantially from the same period last year, when the firm reported a loss of just $1.15 million.
The biggest culprit? Ethereum.
The second-largest crypto asset, and the primary treasury vehicle for BitMine, has fallen nearly 53% from its August all-time high of $4,946, recently changing hands at $2,346. ETH was trading around $1,965 at the close on February 28, down from about $2,800 at the start of December.
BitMine, which relentlessly adds to its holdings—including a $157 million ETH purchase reported earlier this week—now holds 4,874,858 ETH worth more than $11.3 billion. But that’s far less than it has paid to accumulate it, having purchased its first 4.47 million ETH for nearly $17 billion, according to its 10-Q.
In other words, 92% of the firm’s total ETH holdings were accumulated with an average price of around $3,794 per ETH, or around 63% higher than the asset currently trades. The staggering losses have shrunk in recent days, as ETH has jumped around 4% in the last week of trading.
Shares in the firm (BMNR), which were uplisted last week to the NYSE from the smaller NYSE American exchange, are up around 1% on Wednesday, recently changing hands at $21.69.
They’ve fallen nearly 60% in the last six months of trading and are down 20% year-to-date.
Q&A
What caused BitMine's $3.8 billion loss in the last quarter?
BitMine's loss was mainly due to unrealized losses from its Ethereum holdings, which accounted for nearly 99% of the reported losses.
How much has BitMine lost in total over the past six months?
BitMine's total losses have exceeded $9 billion over the six-month period ending in February.
What impact did Ethereum market conditions have on BitMine's performance?
Ethereum market conditions significantly affected the value of BitMine's holdings and the economics of its staking activities, driving its financial results.
