The world’s biggest corporate owner of Ethereum (ETH-USD) is feeling the sting of a shifting market. On Wednesday, Bitmine Immersion Technologies (BMNR) revealed a massive quarterly hit as it moves away from its roots in mining to focus entirely on digital assets.
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Massive ETH Holdings Trigger Accounting Loss
The firm spent billions to stack up a giant pile of tokens, but the way these assets are tracked on paper led to a heavy deficit this quarter.
Latest 10-Q filings show the company now owns 4.87 million Ether, which is nearly 5% of the entire supply. While the company spent over $10 billion to buy these tokens at an average of $2,206, the falling market price during the quarter caused a $3.8 billion net loss. Under new accounting rules, these price swings show up as a loss even if the company does not sell its tokens.
Staking Revenue Replaces Mining Income
The company has almost completely stopped digging for new coins to focus on earning rewards from the tokens it already owns. This pivot has changed how the business makes its money every day.
Self-mining revenue crashed by 86%, leaving it at just $219,000 for the quarter. Staking has taken over the business, bringing in $10.2 million of the firm’s $11 million total revenue. However, the costs of running the business shot up to $75 million for the quarter. This creates a wide gap between what the company earns and what it spends on staff and offices.
Bitmine’s Derivatives Trading Adds Extra Pressure
The filing reveals that the firm is trying to squeeze more profit out of its holdings by using complex financial tools. These moves brought in some cash but also led to more paper losses.
Bitmine recorded $65.3 million in losses from derivatives while making $24.1 million from selling options. The firm likely uses covered calls to try and get extra yield from its ETH. Despite the red ink, Chairman Tom Lee said the recent price drop is an attractive chance to buy more.
Is Bitmine Stock a Good Buy?
Turning to TipRanks, BMNR stock has a Moderate Buy consensus rating based on one Buy rating from an analyst assigned in the last three months. The average 12-month BMNR price target sits at $33, implying an upside potential of 53.6%.
