Summary
- BitMine aims to secure up to $300 million to advance its ETH treasury strategy.
- The preferred shares will have a $100 face value and a 9.50% annual dividend.
- Analysts indicate that staking yields may support dividend payments, but there are risks linked to ETH prices and timing.
Ethereum treasury firm BitMine is looking to raise as much as $300 million through a sale of 3 million preferred shares to finance ETH acquisitions, staking, validator infrastructure, and other related investments.
Should BitMine's board give the green light, the Series A preferred shares would feature a $100 face value and offer a 9.50% annual cash dividend distributed weekly, as detailed in a preliminary prospectus submitted to the SEC on Wednesday. BitMine has also sought to list the shares on the NYSE under the ticker BMNP.
Currently, native ETH staking serves as the company’s “primary revenue source,” with 4.7 million ETH staked via its MAVAN platform as of May 25, projecting annualized staking revenue at approximately $276 million, according to the filing made public on Wednesday.
BitMine’s strategy marks a shift from Bitcoin mining to managing an ETH treasury, with its ETH holdings surpassing $1 billion last year.
This filing follows BitMine’s recent acquisition of 26,497 ETH valued around $52 million, increasing its total ETH holdings to 5,416,901, which represents about 4.48% of Ethereum’s total supply, alongside approximately $446 million in cash. Meanwhile, the strategy sold around $2.5 million in Bitcoin to help cover dividends on its own preferred shares.
BitMine’s initiative to offer preferred stock comes after several substantial ETH purchases, including a transaction that pushed its holdings beyond 5 million ETH in April, a $151 million buy in May after Lee identified ETH's dip below $2,200 as an “attractive opportunity,” and another acquisition of $237 million the week after, which moved the firm closer to its target of holding 5% of Ethereum’s supply.
(Disclosure: Tom Lee is one of nine angel investors in Dastan, the parent company of an editorially independent Decrypt.)
Decrypt has reached out to BitMine for further comment and will update this article if they respond.
Potential Returns and Considerations
BitMine's preferred stock offering may differ from Strategy’s STRC due to ETH staking providing BMNR with a protocol-native income source, as per an earlier analysis by Alchemy Research in April. Staking rewards could support cash dividends while allowing the remaining ETH rewards to accumulate, the research firm noted.
In this scenario, a significant staked ETH treasury could help cover preferred dividends, as increased ETH prices would enhance the dollar value of staking rewards, since “a rising ETH price directly benefits the preferred program,” the firm explained.
However, this structure relies on the conversion of ETH rewards into dollars at the optimal price and timing.
If successful, this arrangement could “reduce cash drag, support dividend sustainability, and mitigate common share dilution through on-chain yield generation,” said Dominick John, an analyst at Zeus Research, in an interview with Decrypt.
BitMine could generate income by staking ETH to assist in network operations and by utilizing MEV optimization, which helps validators earn additional transaction-related rewards, to uphold the 9.50% dividend, John added.
The larger investment decision hinges on Lee’s strong belief in ETH, particularly as Strategy’s STRC faces challenges, according to Ryan Yoon, a senior analyst at Tiger Research.
Tom Lee “has significant confidence in ETH” and views it as his “only viable hedge,” Yoon stated to Decrypt.
“Even if STRC declines, he feels compelled to buy the dip, considering it a perfect entry point,” Yoon added, noting that ETH’s staking yield provides BitMine with a “key differentiator” that could enable it to leverage this as a dividend source.