Summary Bitmine Immersion Technologies has experienced a sharp decline amid a broader crypto selloff, despite its focus on Ethereum over Bitcoin. The company is building a crypto treasury, holding significant Ethereum and Bitcoin assets, and aims to own 5% of outstanding Ethereum tokens. The stock is down over 50% from the October highs while developing a business around staking rewards to acquire more tokens in the future. The stock is appealing here on the sell off toward NAV with the opportunity for upside via higher ETH prices and corporate moves to acquire more tokens. BitMine Immersion Technologies ( BMNR ) has crashed the last couple of months with the rotation out of crypto. The No. 2 crypto treasury concept is focused on Ethereum and hasn't seen the same collapse in the underlying assets. My investment thesis is ultra Bullish on the crypto treasury concept after the complete reset of the stock. Source: Finviz Great Test BitMine Immersion has seen explosive growth in the last few months since going public. The recent sell off in the stock and the owned-crypto assets will provide a great indication of whether the crypto treasury concepts are fundamentally supported. The company listed the following crypto assets in the market update on Nov. 23: Ethereum ( ETH-USD ) - 3,629,701 tokens Bitcoin ( BTC-USD ) - 192 tokens Eightco ( ORBS ) - 13.7 million units Cash - $800 million At the time, BitMine Immersion listed a total investment holdings of $11.2 billion. The key Ethereum price had already dipped from the $3,120 price used for the weekly update on Nov. 17 with the current calculation based on a price of $2,840. Source: TradingView The stock jumped with BitMine Immersion buying another 69,822 ETH tokens during the week. Strategy ( MSTR ) had been under pressure over the last week due to the leading crypto treasury facing pressure from the slumping Bitcoin price and concerns over debt, which is a risk BitMine Immersion doesn't face having focused solely on selling shares. Naturally, the BitMine Immersion focus is 99.9% on investing in Ethereum tokens and establishing a crypto treasury with 5% of the outstanding digital coins. BitMine now owns 3.63 million tokens for ~3% of the outstanding tokens. Source: BitMine Immersion presentation The biggest issue with BitMine Immersion is deriving the total shares outstanding at any particular point in time. According to the 10-K , the diluted share count was 384 million shares as of Nov. 20. Dip Opportunity The stock slipped to only $26 to end last week, placing the market cap at just $10 billion with a similar asset value of close to $10 billion. The stock had fallen far more than 50% from the early October peak while Ethereum is only down about 40% during this period from a peak of ~$4,700 in early October before the major liquidity event. According to DefiLlama, Ethereum dominates the TVL (total value locked) usage via cryptos. The digital coin handles 68% of the market, followed by Solana at nearly 9% and Bitcoin down at only 6.5%. Source: DefiLlama Ethereum has more real world value due to the blockchain of choice for stablecoins. BitMine Chairman Tom Lee continues to promote a value potential for the crypto of $62,500 based on the "payment rails" benefit in the future, pushing Ethereum up to a ratio of 0.25x the price of Bitcoin. The ETH/BTC ratio has traded down toward the historical lows at 0.33x. The normal ratio is 0.0479x BTC with a peak in 2021 at 0.873x. ETH would hit $12K and $22K, respectively, on reclaiming these ratios with BTC with the assumption that BTC trades up to $250K per token. Bitcoin currently trades below $90K, so the price targets could require major adjustments without a crypto bounce. The BitMine Immersion play is that crypto will continue to rise and that Ethereum will outperform Bitcoin due to the utility of the digital coin and the connection to future payments due to the stablecoin connection. Also, BitMine expects to use a 5% treasury holding position to generate staking revenues via the Made-in-America Validator Network (MAVAN) to further produce income to buy more Ethereum. The company declared a minimal annual dividend of $0.01. The dividend payout is minimal with a payout of below $4 million, but management likely tried to signal confidence in the balance sheet with $800 million in current cash. The stock is interesting here for anyone believing in the Ethereum story and the crypto treasury concept. BitMine Immersion has the potential to generate future income from staking and the utility from ETH could lead to higher crypto prices with the company buying more tokens from potentially selling more stock in the future at a premium to NAV. Naturally, the biggest risk is lower crypto prices. BitMine Immersion doesn't face any major corporate risk having not utilized debt or preferred securities with payout requirements. Not to mention, the company has the ability to unload Bitcoin and the ORBS shares without unloading the more important ETH tokens. Regardless, a lot of the benefits of the treasury concept could be lost without capital to purchase even lower Ethereum. Takeaway The key investor takeaway is that BitMine Immersion has been hit by slumping crypto prices, especially the key Ethereum price. An investor can now get into the stock at a much lower price and closer to NAV and hopefully ride the digital currency back to prior highs and potentially much higher. So far, the company has survived a major test handling the dip by purchasing more crypto and issuing a dividend.
