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 $11.39 billion.
Bitmine shares plummeted from $63 to $40 during the recent cryptocurrency flash crash as Ethereum fell below $3,350, leaving the company with more than $1.3 billion in unrealized losses.
The company paid an average of $4,037 per ETH token and has $389 million in cash, making its performance entirely dependent on Ethereum’s volatile price movements.
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If you believe in cryptocurrencies but don’t want to worry about cold wallets and cryptocurrency exchanges, there is an indirect way to invest in Ethereum (CRYPT:ETH). You can gain immediate exposure to Ethereum price movements with shares of Bitmine Immersion Technologies (NYSEAMERICAN:BMNR) stock.
Although a relatively new company, Bitmine Immersion Technologies is definitely making waves in the cryptosphere. The president of Bitmine Immersion Technologies is none other than Thomas “Tom” Lee, co-founder of Fundstrat Global Advisors and a loud and proud Ethereum cheerleader.
Lee and Bitmine Immersion Technologies are very ambitious, and getting BMNR stock back to $100 is not out of the question. At the same time, investors do not need to over-allocate Bitmine Immersion Technologies shares, as the path to fabulous wealth is not assured and probably will not be easy.
It is not difficult to summarize the business model of Bitmine Immersion Technologies. The company is an Ethereum treasury, which is a fancy way of saying that it accumulates large amounts of Ethereum.
It seems that Lee and Bitmine Immersion Technologies don’t just want to store Ethereum; They may also try to influence the Ethereum market to some extent. Bitmine Immersion Technologies already controls around 2.8% of the circulating supply of Ethereum.
Lee’s goal for Bitmine Immersion Technologies is to control 5% of the circulating supply of Ethereum. “We are now more than halfway towards our quest for 5% ETH,” Lee proudly stated.
At the company’s current rate of Ethereum acquisition, Bitmine Immersion Technologies could easily hit that 5% target. Recently, Bitmine Immersion Technologies purchased 82,353 ETH, bringing the company’s total position to 3.4 million ETH.
The math on this is mind-boggling. If the price of Ethereum 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 compared to Bitmine Immersion Technologies’ cryptocurrency position. Clearly, the fate of Bitmine Immersion Technologies and BMNR stock will largely depend on Ethereum price performance.
If you prefer to invest in stocks rather than cryptocurrencies, BMNR stock is a good indicator for directly owning Ethereum. However, owning an ETH proxy is a two-sided coin, as Ethereum can crash as fast as it can recover.
Owning shares of Bitmine Immersion Technologies surely felt good a month ago, as the price of ETH was heading towards $4,750 and looked ready to break above $5,000. At the time, BMNR shares were trading near $63.
However, just as the cryptocurrency market can be generous, it can also be tough. In what has been described as a cryptocurrency flash crash, Ethereum price recently fell below $3,350.
Meanwhile, Bitmine Immersion Technologies shares plummeted to the $40 area. This heartbreaking price action raised the question of whether the sudden drop in cryptocurrencies signals the beginning of a long and painful crypto winter.
Lee doesn’t seem too worried. He believes that the cryptocurrency liquidation event “reset the market” and created new accumulation opportunities, and he calmly assured that the “cryptocurrency market” is consolidating.
Only time will tell if the price “reset” is the beginning of a cold and bitter winter. Lee’s calm confidence may be reassuring, but sensible investors should view Ethereum, and therefore BMNR stock, as a speculative asset prone to bouts of volatility.
For what it’s worth, Lee called for Ethereum to potentially hit $7,000 before the end of the year. A price increase of this magnitude would certainly help Bitmine Immersion Technologies, as the company reportedly paid $4,037 per ETH token on average.
Additionally, according to 10x Research via Bloomberg, Bitmine Immersion Technologies “has over $1.3 billion in unrealized losses with no dry powder left.” I already mentioned Bitmine Immersion Technologies’ $389 million in cash holdings, which can 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 trajectory of Ethereum price. Since the success or failure of Bitmine Immersion Technologies depends on the performance of Ethereum, only hardcore cryptocurrency optimists should consider owning BMNR shares.
Additionally, given the volatility of Ethereum’s price, it is advisable to keep a small position if you decide to buy Bitmine Immersion Technologies shares. It’s fine to expect BMNR stock to hit $100, but bullish Ethereum predictions can only carry so much weight in an often unpredictable cryptocurrency market.
