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 stock crashed from $63 to $40 during the recent crypto 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 holds $389 million in cash, making its performance entirely dependent on Ethereum’s volatile price movements.
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If you are a fan of cryptocurrencies but don’t want to bother with cold wallets and crypto exchanges, there is an indirect way to invest in Ethereum (CRYPTO: ETH). You can get 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 crypto-sphere. The president of Bitmine Immersion Technologies is none other than Thomas “Tom” Lee, co-founder of Fundstrat Global Advisors and avid cheerleader for Ethereum.
Lee and Bitmine Immersion Technologies are very ambitious and bringing BMNR stock back to $100 is not out of the question. At the same time, investors do not need to overinvest in Bitmine Immersion Technologies shares, because the path to fabulous wealth is not assured and is unlikely to be easy.
It is 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 stores large amounts of Ethereum.
It appears that Lee and Bitmine Immersion Technologies aren’t just interested in storing Ethereum; they may also seek to influence the Ethereum market to some extent. Bitmine Immersion Technologies already controls approximately 2.8% of Ethereum’s circulating supply.
Lee’s goal for Bitmine Immersion Technologies is to control 5% of Ethereum’s circulating supply. “We are now more than halfway to our goal of reaching 5% ETH,” Lee said proudly.
At the company’s current rate of Ethereum acquisition, Bitmine Immersion Technologies could easily reach that 5% target. Just 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-blowing. If the price of Ethereum is around $3,350, then Bitmine Immersion Technologies’ 3.4 million ETH would be worth around $11.39 billion.
The company also recently had unencumbered cash totaling $389 million, but that represents a drop in the bucket compared to Bitmine Immersion Technologies’ cryptocurrency position. It is therefore clear that the fate of Bitmine Immersion Technologies and BMNR shares will largely depend on the price action of Ethereum.
If you prefer to invest in stocks rather than cryptocurrencies, BMNR stock is a very good indicator for owning Ethereum directly. Owning an ETH proxy is a two-sided coin though, as Ethereum can collapse as quickly as it can recover.
Owning Bitmine Immersion Technologies shares surely felt good a month ago, as the ETH price was heading towards $4,750 and looked poised to surpass $5,000. At that time, BMNR stock was trading at nearly $63.
Yet just as the crypto market can be generous, it can also be harsh. In what has been described as a crypto crash, the price of Ethereum recently fell below $3,350.
Meanwhile, Bitmine Immersion Technologies stock crashed into the $40 area. This heartbreaking price action has raised the question of whether crypto’s flash crash signals the start of a long, painful crypto winter.
Lee doesn’t seem too worried. He believes that the cryptocurrency liquidation event has “reset the market” and created new accumulation opportunities, and calmly assured that the “cryptocurrency market is consolidating.”
Only time will tell if the price “reset” marks the start of a cold and harsh winter. Lee’s calm confidence may seem reassuring, but sensible investors should view Ethereum, and therefore BMNR stock, as a speculative asset subject 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 rise of this magnitude would certainly help Bitmine Immersion Technologies, as the company would have paid an average of $4,037 per ETH token.
Additionally, 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’ve already mentioned Bitmine Immersion Technologies’ $389 million in cash, which can be considered “dry powder”, but that’s debatable.
Ultimately, there are too many moving parts to easily predict Ethereum’s future price action. Since the success or failure of Bitmine Immersion Technologies depends on the performance of Ethereum, only ardent cryptocurrency optimists should consider owning BMNR stock.
Additionally, given Ethereum’s price volatility, it is wise to stay small in your position if you choose to buy Bitmine Immersion Technologies stock. It’s nice to hope that BMNR stock hits $100, but Ethereum’s bullish predictions can only carry so much weight in an often unpredictable cryptocurrency market.
