Kerrisdale said in a report on Wednesday that Tom Lee’s BitMine is “chasing a model that is on its way to extinction,” as it took a short position on the company, a bet that its stock would fall.
Kerisdale argued BitMine’s strategy of selling shares at a premium to purchase Ether (ETH) and grow its token-per-share metric is no longer effective, and the company’s value compared to its crypto holdings is narrowing.
BitMine is a Bitcoin (BTC) mining company that changed its strategy earlier this year to acquire large amounts of ETH and has become the largest public holder of the token. Kerrisdale pins Bitmine at 9 Ether per 1,000 shares.
It’s one of dozens of crypto treasury companies that are buying huge amounts of crypto in the hopes of attracting investor attention.
BitMine did not immediately respond to a request for comment.
BitMine shares end Tuesday at a gain
Investors wavered initially as the stock opened above $60 but fell by over 5% in early trading to a daily low of $57.41 after Kerrisdale’s report. However, shares in BitMine (BMNR) ended trading on Tuesday up 1.35% at $60 and continued to gain 0.4% after the bell.
Kerrisdale has targeted other crypto companies, including Bitcoin miner Riot Platforms and Bitcoin‑buying firm Strategy.
At the time, Riot rebuffed Kerrisdale’s report, telling Cointelegraph that it made “unsound conclusions.” Strategy didn’t directly respond to its short seller report, but Chair Michael Saylor has long touted the company's attractiveness to investors.
Stock issuance is making investors fatigued, Kerrisdale claims
In its report, Kerrisdale also criticized BitMine’s pace of stock offerings, noting that the firm had raised $10 billion over the last three months primarily through at‑market share sales.
“The sheer velocity of BMNR’s stock issuance has turned early enthusiasm into fatigue, with investors conditioned to believe every rally will be met by more supply,” Kerrisdale said.
It said that BitMine’s $365 million share offering in late September was “a discounted giveaway” and argued the deal was “a cleverly packaged dilutive raise that sacrificed long‑term credibility for short‑term cash.”
Tom Lee is no Michael Saylor, says Kerrisdale
Kerrisdale also swiped at BitMine’s executive chair Lee, claiming that while he “brings name recognition” to the company, “he does not command the kind of cult‑like following that turned Michael Saylor into a meme‑stock icon able to issue billions in equity without losing investor enthusiasm.”
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It added that BitMine’s strategy needs “scarcity, charisma, and presumably something more innovative” than at‑market stock issuance, but claimed the company “offers none of these.”
Kerrisdale also criticized other areas of BitMine’s business, claiming it stopped reporting on its net asset value (NAV) per share as its growth slowed and the premium on its multiple of net asset value (mNAV) fell from over 2.0× in August to 1.2× by September.
“BMNR’s pitch rests on the idea that it can deliver more than the token alone,” it wrote. “Yet the strategy is generic, the competition is mushrooming, disclosures have grown opaque, ETH‑per‑share has slowed, and capital raises promoted as ‘premium’ are in reality dilutive.”
The company said its targeting of BitMine is “not a bet against Ethereum itself, but rather one against the notion that investors should still 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 argued.
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