While Bitmine Immersion Technologies’ ($BMNR) massive $9.6 billion in paper losses makes the move look like a giant mistake to outside observers, Chairman Tom Lee insists the purchase is a calculated risk to control the market. While most competing firms are completely halting crypto purchases to protect themselves from a brutal crash, Bitmine just made its biggest Ethereum (ETH-USD) weekly purchase of the year. Bitmine bought 126,971 Ethereum last week for roughly $214 million as prices tanked, bringing Bitmine closer to its goal of controlling a huge portion of the token supply despite heavy scrutiny over its funding methods. BMNR stock rallied over 6% in early trading on the news.
Tom Lee Defends Bitmine’s Aggressive Buying
The chairman of Bitmine remains completely confident in the long-term value of digital currencies despite a 65% drop from the record highs seen in August. Thomas Lee explained the sudden increase in accumulation by stating that “We increased our buying as we believe this pullback in ETH prices does not reflect the strengthening of Ethereum fundamentals,” even though he previously suggested a slower approach. The aggressive move contrasts sharply with rival businesses that chose to halt spending and sell off assets as the market turned lower.
Bitmine Approaches Its ETH Supply Milestones
The massive weekly acquisition pushed the total holdings of Bitmine to 5.54 million Ethereum, which represents a total valuation of $9.3 billion at current market rates. With this purchase, Bitmine now controls 4.59% of the entire outstanding supply of the token.
Management expects Bitmine to cross its long-term goal of owning 5%, known as the “Alchemy of the 5%,” of the total supply later this year, even though the aggressive strategy has already resulted in an estimated $9.6 billion in paper losses for Bitmine.
Bitmine Takes a Page Out of Strategy’s Playbook
Bitmine has taken a page directly from Strategy’s ($MSTR) playbook by revealing plans to issue a new class of preferred equity that pays dividends to raise more money. This funding model relies heavily on investor confidence, which is currently shaking across the broader tech and crypto markets.
Investors are debating whether Strategy can comfortably handle its own dividend obligations as digital asset prices tumble, causing its latest preferred shares to fall 10% below their original value.
Is Bitmine Stock a Good Buy?
Turning to TipRanks, BMNR stock has a Moderate Buy consensus rating based on one Buy rating from an analyst assigned in the last three months. The average 12-month BMNR price target sits at $33, implying an upside potential of 95.3%.
