Bitmine Immersion Technologies (BMNR) controls 2.8% of Ethereum’s circulating supply and aims to reach 5%, with current holdings of 3.4 million ETH valued at $11.39B.
Bitmine stock crashed from $63 to $40 during the recent crypto flash crash as Ethereum fell below $3,350, leaving the company with over $1.3B in unrealized losses.
The company paid an average of $4,037 per ETH token and holds $389M in cash, making its performance entirely dependent on Ethereum’s volatile price movements.
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If you’re a cryptocurrency believer but don’t want to bother with cold wallets and crypto exchanges, there’s an indirect way to invest in Ethereum (CRYPTO:ETH). You can get immediate exposure to Ethereum’s price movements with shares of Bitmine Immersion Technologies (NYSEAMERICAN:BMNR) stock.
Although it’s a relatively new company, Bitmine Immersion Technologies is definitely making waves in the crypto-sphere. The chairman of Bitmine Immersion Technologies is none other than Thomas “Tom” Lee, a co-founder of Fundstrat Global Advisors and a loud-and-proud Ethereum cheerleader.
Lee and Bitmine Immersion Technologies are highly ambitious, and getting BMNR stock back to $100 isn’t out of the question. At the same time, investors don’t need to over-allocate into Bitmine Immersion Technologies shares as the path to fabulous wealth isn’t assured and probably won’t be easy.
It’s not difficult to summarize the business model of Bitmine Immersion Technologies. The company is an Ethereum treasury company, which is a fancy way of saying that it stockpiles large quantities of Ethereum.
It seems that Lee and Bitmine Immersion Technologies don’t just want to stockpile Ethereum; they may also seek to influence the Ethereum market to a certain extent. Already, Bitmine Immersion Technologies controls around 2.8% of the circulating supply of Ethereum.
Lee’s objective for Bitmine Immersion Technologies’ is to control 5% of Ethereum’s circulating supply. “We are now more than halfway towards our pursuit of 5% of ETH,” Lee proudly declared.
At the company’s current rate of Ethereum acquisition, Bitmine Immersion Technologies could easily reach that 5% goal. Just recently, Bitmine Immersion Technologies purchased 82,353 ETH, thereby bringing the company’s total position to 3.4 million ETH.
The math on this is mind-blowing. If the Ethereum price is around $3,350, then Bitmine Immersion Technologies’ 3.4 million ETH would have a dollar value of around $11.39 billion.
The company also recently had unencumbered cash holdings totaling $389 million, but that’s a drop in the bucket when compared to Bitmine Immersion Technologies’ cryptocurrency position. So clearly, the fate of Bitmine Immersion Technologies and of BMNR stock will largely depend on the price performance of Ethereum.
If you prefer to invest in stocks rather than cryptocurrency, BMNR stock is a pretty good proxy for directly owning Ethereum. Owning an ETH proxy is a double-sided coin, though, as Ethereum can crash as fast as it can rally.
Holding Bitmine Immersion Technologies stock surely felt good a month ago as the ETH price headed toward $4,750 and looked ready to break above $5,000. At that time, BMNR stock traded near $63.
Yet, just as the crypto market can be generous, it can also be harsh. In what has been described as a crypto flash crash, the Ethereum price recently pulled back below $3,350.
Meanwhile, Bitmine Immersion Technologies stock crashed to the $40 area. This harrowing price action prompted the question of whether the crypto flash crash signals the start of a long, painful crypto winter.
Lee doesn’t seem to be overly concerned. He believes that the cryptocurrency liquidation event “reset the market” and created new accumulation opportunities, and calmly assured that the crypto “market is consolidating.”
Only time will tell whether the price “reset” is the start of a cold, bitter winter. Lee’s calm confidence may feel reassuring, but sensible investors should view Ethereum, and hence BMNR stock, as a speculative asset that’s prone to bouts of volatility.
For what it’s worth, Lee called for Ethereum to potentially rally to $7,000 before the end of the year. A price run-up of this magnitude would certainly help Bitmine Immersion Technologies, as the company reportedly paid $4,037 per ETH token on average.
Furthermore, according to 10x Research via Bloomberg, Bitmine Immersion Technologies is “sitting on over $1.3 billion in unrealized losses with no dry powder left.” I already mentioned Bitmine Immersion Technologies’ $389 million in cash holdings, which may be considered “dry powder” but that’s debatable.
When all is said and done, there are too many moving parts to easily predict the future price path of Ethereum. Since Bitmine Immersion Technologies’ success or failure depends on how Ethereum performs, only stalwart cryptocurrency optimists should consider owning BMNR stock.
Additionally, given Ethereum’s price volatility, it’s wise to stay small in your position if you choose to buy Bitmine Immersion Technologies shares. It’s fine to hope that BMNR stock will reach $100, but bullish Ethereum predictions can only carry so much weight in an often unpredictable cryptocurrency market.
