Bitmine Immersion: More Than Halfway There

Summary Bitmine Immersion (BMNR) has surpassed the halfway mark in its goal to acquire over 5% of outstanding Ethereum ￰0￱ shares now trade at a more than 17% premium to its nearly $13 billion net asset value, down significantly from previous ￰1￱ thesis hinges on BMNR's belief that Ethereum is undervalued versus Bitcoin and could surge as blockchain and AI adoption ￰2￱ investors have piled into cryptocurrencies in recent years, a new trend in the market has been firms with little to no actually business transforming into crypto holding ￰3￱ names have sold billions of dollars worth in their shares, hoping that crypto prices will soar over time, and thus their equity will become substantially more ￰4￱ name I've covered in this space that's been a major player has been Bitmine Immersion ( BMNR ), which announced on Monday that it has passed the halfway point of its Ethereum accumulation ￰5￱ coverage of the name Back in July, I wrote about the company just after its $2 billion equity sales program was announced, which helped the stock gain a major new ￰6￱ the company holding about $1 billion worth of Ethereum, crypto supporter Cathie Wood and her ETF firm Ark Invest had bought several million shares of ￰7￱ that time, it appeared that the stock was trading at a significant premium to its crypto holdings, and investors would certainly be diluted to buy more Ethereum over ￰8￱ that time, Bitmine Immersion shares have rallied well over 30%, compared to a more than 5% gain for the S&P 500 and a less than 10% gain in ￰9￱ holdings continue to rise A few weeks after my previous article, the company announced a major plan to acquire ￰10￱ goal was to hold 5% of the outstanding tokens , and to do so it would sell up to $20 billion worth of BMNR ￰11￱ would mean the outstanding share count would surge several times over from the roughly 51 million shares when I last covered ￰12￱ it appears that share sales are taking place on a weekly basis at market prices as purchases rise, the company was able to take advantage of a direct offering to sell shares at a premium back in ￰13￱ morning, the company published its latest weekly update , detailing that it took advantage of the recent crypto liquidation that took place over US / China trade war ￰14￱ company acquired over 200,000 ETH tokens, pushing its total to more than 3 million, putting it past the halfway point of its 5% ￰15￱ company also owns a much smaller of Bitcoin, along with a $135 million stake in Eightco Holdings ( ORBS ), and had unencumbered cash of more than $100 ￰16￱ the company's investor relations website, Bitmine Immersion recently published a presentation on the firm's overall ￰17￱ of the key points involve past returns that are not a guarantee of future results.

First, the company cited the roughly 25X return in Strategy ( MSTR ) shares since August 2020 compared to the 10X gain in Bitcoin over that same time, as Strategy has become the leading Bitcoin ￰18￱ second major point was that Ethereum is currently undervalued because it is trading well below its 8-year average ratio to Bitcoin, and substantially below its all-time high as seen ￰19￱ To Bitcoin Ratio (BMNR Corporate Presentation) As I was putting this article together, the ratio stood at about 0.03590, which is a little less than when the presentation was ￰20￱ the 8-year average as shown above, along with the current Bitcoin price, Ethereum should be valued at $5,480 per token according to the ￰21￱ the price currently being just around $4,100, one would expect BMNR to continue buying in the near term given their stance that Ethereum is undervalued as compared to ￰22￱ company believes that Ethereum will surge over time regardless, as more businesses become involved in Artificial Intelligence and move into the ￰23￱ to determine a proper valuation Unlike Strategy, which tells us each week how many shares of its stock were sold in the previous reporting period under its equity sales programs, Bitmine Immersion does not give us an updated share count.

Currently, there are a little under 280 million shares outstanding according to Yahoo! Finance , while over at CNBC the number is about 5 million or so ￰24￱ roughly $53 per share, BMNR according to the CNBC share count is valued at a little more than $15 billion. However, the press release on Monday morning from the company only cites a $12.9 billion total value of its holdings, and Ethereum is down about 1% from the Sunday price they used for that calculation. Thus, BMNR shares are trading about a 17% or so premium to the value of all of its holdings, and that's assuming the CNBC share count is ￰25￱ in some more dilution, and that premium could be near the 20% or so ￰26￱ enough, that premium has come down quite substantially over ￰27￱ I last covered the name, the premium was at least double, if not 2.5 times, depending on what the actual share count was then.

I'll also point out that during Q3, the large premium that Strategy shares traded at to their Bitcoin holdings evaporated quite ￰28￱ I said back in July, a small company like this with only around $7 million or so of annual run-rate revenue, even at a crazy growth valuation like 30 times sales, would only be valued at roughly $200 million, and Bitmine is now at $15 ￰29￱ thoughts and recommendation On Monday, Bitmine Immersion announce that it has passed the halfway point of its initial goal to acquire more than 5% of the outstanding Ethereum ￰30￱ just a few months, the company has built a crypto stash worth more than $12 billion, although that has sent the outstanding share count from less than 6.2 million to a reportedly over 284 ￰31￱ the company believes that Ethereum is undervalued and shares could outperform the return of the crypto token just like Strategy did with Bitcoin in recent years, the premium at which the stock trades to its holdings has come down ￰32￱ the company gets to its 5% holdings target, I'm not going to change my rating on BMNR, meaning I'll stick with a hold here ￰33￱ I've stated with Strategy in recent months, your view of a company like this is based off your stance on Ethereum ￰34￱ investors are going to face a lot of dilution moving forward, but if crypto prices continue to soar, these holding companies will see their shares rise over ￰35￱ you want less volatility, however, you're probably better off in an exchange traded fund or holding the actual crypto.