Bitmine, led by Tom Lee, Emulates Saylor's Strategy with 9.5% Yield on Preferred Stocks

Bitmine Immersion Technologies, an Ethereum treasury firm headed by Tom Lee, is set to launch a preferred stock offering aimed at raising $300 million, providing a 9.5% annual dividend.

Overview

In a strategic move, Bitmine is looking to issue perpetual preferred stocks with a 9.5% annual dividend, as detailed in a recent filing. This initiative aims to raise as much as $300 million, signaling a shift towards new funding avenues in the digital asset sector.

Key Points:

• Bitmine is introducing 3 million shares of Series A Perpetual Preferred Stock, each valued at $100, with a dividend rate of 9.5% payable weekly if approved by the board.
• The shares are set to trade on the New York Stock Exchange (NYSE) under the ticker BMNP.
• This move mirrors the financing strategies of other bitcoin-focused companies, including Michael Saylor's Strategy, which have sought innovative funding for their digital asset holdings.

According to a filing with the U.S. Securities and Exchange Commission (SEC), Bitmine plans to issue 3 million shares of its Series A Perpetual Preferred Stock, each with a nominal value of $100. These securities will offer a 9.5% annual dividend, distributed weekly in cash if sanctioned by the company's board.

The preferred shares are expected to be listed on the NYSE under the ticker BMNP, pending regulatory approval, according to Bitmine's statement.

This offering emerges as digital asset treasury firms navigate challenges posed by declining cryptocurrency prices and are actively seeking fresh funding options. Notably, Strategy (MSTR), recognized as the largest corporate bitcoin holder, has previously introduced various preferred stock classes. Similarly, Strive (ASST) has issued dividend-yielding preferred stocks.

Bitmine's strategy aims to leverage these successful models within the Ethereum treasury context, as indicated in the filing.

Over the past year, Bitmine has aggressively accumulated more than 5.3 million ETH, valued at around $10 billion, which represents approximately 4.5% of Ethereum's circulating supply. However, this significant investment currently reflects an estimated unrealized loss of $9 billion, with ETH prices dropping below $1,800 from highs around $5,000 in October.

Regarding the preferred stock, Bitmine retains the right to redeem shares at premiums ranging from 10% to 0%, depending on the timing of redemption. Shareholders will also have repurchase options in the event of certain significant corporate changes. The company has not disclosed its intended use for the capital raised through this offering.

The timing of this offering is particularly significant, given the mounting scrutiny on the preferred equity funding approach of Strategy. Recently, its STRC preferred stock fell 5% below its par value of $100, raising concerns among investors regarding the company's ability to sustain its dividend payments amid a decline in bitcoin prices. Similarly, Strive's SATA stock has traded below $97, indicating broader challenges facing the funding models of digital asset firms.