The BitMine Immersion Technologies (NYSE: BMNR) stock dipped more than 5% on Oct. 9 following a prominent investment firm’s decision to short-sell it.
Chaired by Wall Street legend Tom Lee, Bitmine is the world’s largest Ethereum-focused digital asset treasury (DAT) firm.
A DAT company refers to a public firm that holds a significant amount of cryptocurrencies like Bitcoin, Ethereum, etc. on its balance sheet — similar to how public firms traditionally hold cash or commodities.
The firm currently holds 2.83 million ETH tokens, valued at more than $12 billion at the time of writing.
The company also holds 192 Bitcoin, valued at more than $23 million at press time. This makes it the second-largest Bitcoin treasury firm after Michael Saylor’s Strategy (Nasdaq: MSTR).
Bitmine chasing a model that is on its way to extinction
Though the company’s stock is up nearly 30% over a month, it fell 4.7% today after Kerrisdale Capital, an investment firm, shared that it is shorting Bitmine.
As per Kerrisdale Capital, BitMine is chasing a model that is on its way to extinction. The sheer velocity of BMNR’s stock issuance has turned early enthusiasm into fatigue, it remarked.
Investors are overwhelmed by a growing number of crypto vehicles, including identical DATs and exchange-traded funds (ETFs) in the market, it added.
“The DAT playbook has become basic & unoriginal.”
Kerrisdale Capital cautioned that its view isn’t a bet against Ethereum itself, but against the notion that investors should pay a market premium for it. “If you want ETH, just buy it directly, stake it with minimal friction, or hold it in one of the rapidly proliferating ETFs,” it recommended.
Though Ethereum will play a long-term role in powering decentralized finance (DeFi) infrastructure, BitMine won’t be able to sustain a premium over the value of its ETH holdings, the short-seller added.
Tom Lee doesn’t command Michael Saylor’s cult-like following
Kerrisdale Capital also commented on Tom Lee’s leadership. Though Lee brings recognition as a strategist and television commentator, he doesn’t command Saylor’s cult-like following, it remarked.
The DAT playbook played dividends when there were only a handful of public companies there were the simplest vehicles to seek exposure to the crypto boom, it added.
“That moment is long gone.”
At press time, the BMNR stock was trading at $56.90.
