Tom Lee Did It Again. Bitmine Spent $24 Million on Ethereum, but Purchases Are Decreasing

Bitmine Immersion Technologies, a company chaired by Ethereum maximalist Tom Lee, purchased 10,452 units of the cryptocurrency ETH last week. At the price stated in the company's announcement ($2,356), this amounts to approximately $24.6 million and marks the smallest weekly purchase since mid-August. At the same time, Bitmine repurchased 2.04 million of its own shares for about $45.9 million. According to Monday's announcement, the company holds 6,051,933 ETH, which is 4.95% of the total supply of Ether.

Bitmine Buys Back Its Shares Instead of Ethereum Tokens

Last week, Bitmine bought back shares at an average price of $22.48. Since the beginning of the year, it has repurchased 22.9 million securities for $399.6 million, at an average price of $17.48. Lee "boasts" that this is the largest buyback of common stock in the history of companies holding cryptocurrencies in their treasury. He explains that the company buys back its own securities when management considers them undervalued.

The company's cash is dwindling. On October 4, the company had $643 million in cash and securities, but by October 25, this had dropped to only $514 million. Weekly losses almost exactly correspond to expenditures: in the last week, $68 million disappeared from the cash, while ETH and shares cost a total of about $70 million. It appears that Bitmine was paying for everything with cash, without selling new shares.

Tom Lee's company is not an exception here. Michael Saylor's strategy, the largest corporate holder of Bitcoin, did not purchase a single BTC last week, instead spending $204.9 million on buying back preferred shares of series STRC. The two largest cryptocurrency treasuries in the world preferred to buy back their own securities in the same week.

The 5% Goal Is Moving Further Away by December

The pace of purchases has been declining since the end of August. In the announcement from August 31, Bitmine reported 53,501 additional ETH purchases, in September averaging 27-28 thousand weekly, and in October from 10 to 15 thousand. By the end of September, with an average of about 21,600 ETH per week, it was estimated that the company would reach the 5% threshold by early November. Now, it is short by 58,067 ETH to reach that goal. At the pace of last week, it will take about five and a half weeks, meaning until the first days of December.

The threshold itself has also shifted. By August 31, Bitmine counted a share of 120.7 million ETH from the supply, and since the announcement on September 8, it has been 122 million (in the last one, it was already 122.2 million). With the old base of 5%, this meant 6.035 million ETH, so the company would have today 5.01% of the supply and the goal would be off the table. The change raised the bar by 75,000 ETH, or about $177 million at the current rate. No explanation was found in the announcements. The supply of Ether is indeed increasing, but by less than a million tokens per year, not 1.3 million in a week.

What’s next? In an August conversation with the Bankless podcast, Lee mentioned that after reaching 5%, the company might sell ETH from staking rewards to prevent its share from increasing. He wants to postpone the decision on whether to exceed the threshold until 2027.

Staking Is Growing, Valuation Is Falling

In staking, Bitmine holds 5,227,037 ETH, which is 159,728 more than the previous week. For at least the last three weeks, this number had remained stable at 5,067,309. The locked tokens represent 86% of the portfolio. With a yield of 2.58%, the company estimates annual revenue at $318 million, and with full staking at $368 million. Part of the ETH is working on its own platform MAVAN (Made in America Validator Network).

The price is not helping. Bitmine valued the tokens at $2,356, while on Monday afternoon Polish time, ETH was priced at about $2,330, which is 13% less than a month ago. The company's total assets, which include cryptocurrencies, cash, and shares in other companies, shrank from $17.4 billion to $15 billion since October 4.

In Monday's announcement, Lee argues that cryptocurrencies are being dragged down by the same sentiments that hit companies related to artificial intelligence. He calculates that ETH has lost 13% since the last peak, while the semiconductor producers' stock fund iShares Semiconductor (SOXX) has dropped 20%. For him, this is further evidence that the bull market in the cryptocurrency market continues. The bull market is one thing, but last week Bitmine preferred to invest in its own shares.

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