Despite Ethereum treasury firm BitMine steadily increasing its ETH holdings over the past week, its share price has dropped 8% in recent trading, with a cumulative decline of more than 30% over the past month.
This seemingly paradoxical situation stems from BitMine’s more than $2 billion in unrealized losses and a broader market reconsideration of the "digital asset treasury company" business model.
01 Market Performance: Treasury Firms Caught in a Downward Spiral
Amid the recent sell-off in the cryptocurrency market, digital asset treasury companies have borne the brunt, with share prices falling much more sharply than the tokens they hold.
BitMine’s troubles are not unique. Data shows that over the past month, MicroStrategy’s share price fell 25%, BitMine Immersion dropped more than 30%, while Bitcoin’s decline over the same period was 15%.
This performance highlights the leveraged nature of treasury company stocks—they rise faster than the underlying crypto in bull markets, and fall harder in bear markets.
Wall Street’s well-known short seller Jim Chanos has consistently shorted MicroStrategy while buying Bitcoin, arguing that investors have no reason to pay a premium for Saylor’s company.
Last Friday, however, he told clients it was time to close out this trade, as the premium had ceased to be extreme.
02 BitMine’s Big Ethereum Bet
BitMine, led by Fundstrat co-founder Tom Lee, aims to accumulate 5% of Ethereum’s total supply.
This ambitious plan has attracted major institutional investors, including Ark Invest and Galaxy Digital.
According to the latest data, BitMine holds nearly 3.4 million ETH, worth about $11.2 billion at current prices, making it the largest Ethereum treasury company and the second-largest crypto treasury company after MicroStrategy.
Following the recent market downturn, BitMine bucked the trend by adding 442,000 ETH to its holdings.
Just last week, BitMine increased its reserves by another 82,353 ETH.
03 Grappling with Massive Unrealized Losses
Although BitMine continues to accumulate ETH, the company’s investment is currently deep in unrealized losses.
According to CryptoQuant, BitMine is facing up to $2.1 billion in unrealized losses tied to its Ethereum holdings.
Markus Thielen, founder of 10x Research, estimates the company’s cost basis at around $3,909 per ETH, while Ethereum has recently been trading near $3,200—resulting in significant paper losses.
In a report on Tuesday, Thielen warned: "While there is no immediate risk of liquidation, the real concern is that BitMine appears to have exhausted its firepower. Who will be the next incremental buyer?"
04 Contradictory Moves by Institutional Investors
Despite BitMine’s substantial unrealized losses, prominent investment firm ARK Invest increased its position in BitMine during the recent share price decline.
On November 7, ARK Invest purchased 240,507 shares of BitMine, valued at approximately $9 million.
These acquisitions were spread across its three exchange-traded funds: ARK Innovation ETF (ARKK), ARK Next Generation Internet ETF (ARKW), and ARK Fintech Innovation ETF (ARKF).
This isn’t ARK’s first investment in BitMine. Back in April, when BitMine began adding Ethereum to its corporate treasury, ARK started accumulating BitMine shares.
BitMine has become a significant component of ARK’s portfolio, ranking among the top fifteen holdings in its ARKK, ARKF, and ARKW funds.
05 Treasury Company Business Model Under Scrutiny
The core issue with digital asset treasury companies is that investors are effectively paying a hefty premium above net asset value for companies that simply hold crypto.
Brent Donnelly, President of Spectra Markets, put it bluntly: "The whole concept makes no sense to me. You’re paying $2 for a $1 bill. Eventually, these premiums will get squeezed."
When this business model first emerged, it provided institutional investors—who previously struggled to invest directly in crypto—with a convenient entry point.
But with the launch of crypto exchange-traded funds over the past two years, institutions now have more direct exposure to digital assets, significantly eroding the unique value proposition of treasury companies.
06 Market Outlook and Analyst Perspectives
Given current market conditions, analysts are divided on the outlook for treasury companies.
Thielen of 10x Research believes Ethereum’s decline has little support below, leaving room for further downside. He notes that all the catalysts that pushed ETH close to $5,000 in August have now disappeared.
Retail interest is also waning—the Google search trend for Ethereum, a rough proxy for retail demand, has dropped to just 13% of its peak.
Thielen sees the $2,700–$2,800 range as the next potential landing zone for Ethereum.
Yet, despite setbacks, some investors continue to add to their BitMine positions. Seattle-based investor Cole Grinde said that although he’s down about $10,000, he’s still buying more and selling BitMine options to help offset losses.
07 Treasury Sector Under Pressure
BitMine isn’t the only treasury company in trouble. Reports indicate that several crypto treasury firms are facing severe financial difficulties due to market pressures.
Evernorth, for example, incurred $78 million in unrealized losses on its XRP position just two and a half weeks after entering the market.
Metaplanet holds 30.8 Bitcoin, with an average purchase price of $106,000, and is dealing with about $120 million in unrealized losses. Its share price has dropped roughly 80% from its peak.
Even MicroStrategy, the pioneer of this strategy, is feeling the strain. Its stock is trading near the low end of its price range at $221, reflecting the value of its Bitcoin holdings.
Outlook
Shares of digital asset treasury companies have become amplifiers of crypto market sentiment. When markets rise, they attract more capital and drive further gains; when markets fall, they become vehicles for leveraged losses, accelerating the downturn.
As one market observer put it, "This correction really hurts those who are hoarding." The fate of BitMine and its peers depends not only on a recovery in Ethereum prices, but also on their ability to prove that their business model still holds value in the age of crypto ETFs.
