I also saw a bunch of people on my timeline mocking Tom Lee (@fundstrat) for saying Bitmine has already been wiped out.
After seeing so much of this, I'm actually getting itchy to trade.
Let's break down what Bitmine is doing from beginning to end.
Compared to @BitMNR and @Jackyi_ld's Trend,
the unrealized losses are 10 times greater.
But apart from the huge unrealized losses, nothing much has happened, and it's not particularly troublesome.
Let's clarify a point that's often confused:
Bitmine isn't a hedge fund trading ETH.
It's not betting on short-term prices.
They're an Ethereum vault company.
The model is so simple it's almost boring.
They consistently buy and hold ETH.
Currently, they hold approximately 4.2 million ETH.
The average cost is between $3600 and $3900.
The current price is $2100.
The unrealized losses are approximately $7.5 billion.
When this number is presented, many people instinctively think of liquidation, liquidation, and death spirals.
But these terms are basically irrelevant here.
The reason is simple: there are no margin calls, no liquidation lines, and no... Aave Cyclic Leverage
They are not the kind of players who rely on high leverage to bet on trends, like Trend Research, which has already wiped out $747 million.
Bitmine's funding primarily comes from three sources:
1/ Equity financing
2/ Operating cash flow
3/ Staking rewards
Without debt, there is no structural pressure to sell.
The worst-case scenario is simply that the stock price falls along with ETH, which is the normal state for a treasury company.
Their goal is also very clear: to hold 5% of the total Ethereum supply long-term.
When the goal is to accumulate to this level, short-term price fluctuations are not the core variable; what really matters is how many tokens they can accumulate before the next cycle arrives.
The lower the price, the higher the accumulation efficiency.
This leads to an interesting comparison:
At the same price of $2100, Trend Research was forced to sell 651,000 ETH, while Bitmine continued to buy 20,000 ETH within the same price range. Same price, opposite actions.
One was forced out of the market due to a high-leverage structure, while the other was building a ten-year-scale position.
Tom Lee once said that paper losses are part of the design.
In the vault model, drawdowns are not bugs, but a function.
This logic has already been fully understood when applied to Bitcoin.
When BTC was at $100,000, @saylor was a genius.
When BTC returned to $76,000, some started saying it was in danger.
When BTC fell to $16,000 in 2022,
almost everyone believed this model was unsustainable.
But structurally, nothing changed; they just kept buying.
Bitmine followed the same path, only replacing BTC with ETH. Without a forced selling mechanism, they could wait for any drawdown to complete naturally. Staking yields were approximately 3 to 4%. This will continuously cover a portion of the costs.
The stock and ETH are highly correlated; when ETH recovers, the stock price naturally recovers.
The whole logic isn't complicated, but it's long-term.
The people mocking Tom Lee now are probably quite similar to those mocking Saylor back then at $16,000.
Back then, everyone kept asking the same question: "We've already lost so much, how can we still buy?"
Later, it was discovered that that very position was the most opportune point to continue buying under the long-term logic.
So, back to the question itself:
Is Bitmine in trouble?
No.
No debt.
No liquidation risk.
Positive staking cash flow.
Still accumulating.
The rest just needs some time.
The tide of the capital bubble will eventually surge towards $BTC and $ETH
