The Ethereum finance company Bitmine is facing an unrealized loss of $3.7 billion.

Source: BTCHaber Original Title: Ether treasure company Bitmine suffers heavy losses Original Link: https://www.btchaber.com/ether-hazine-sirketi-bitminedan-yuklu-zarar/

Digital asset financial companies face market pressure

Digital Asset Finance Company (DAT) has suffered significant losses in the recent downturn of the cryptocurrency market. According to analysis, investors in MicroStrategy have absorbed a net asset value (NAV) shrinkage of about $20 billion since the company began purchasing BTC. A significant portion of these losses comes from the accumulation of BTC purchased at high prices during the period from November to December 2024.

Bitmine's Ethereum Position Loss

The Ethereum-focused DAT structure is also facing similar pressures. According to a study by 10xResearch, Bitmine has incurred losses of over $1,000 per ETH due to the drop in ETH prices. This decline has led to an unrealized loss of approximately $3.7 billion on the company's balance sheet. Analysis indicates that the premium (the difference between the price and NAV) has rapidly narrowed to zero, making it impossible for investors to exit without a loss.

According to public data, the Ethereum financial company Bitmine holds 3.56 million Ethereum (ETH). Based on the then ETH trading price of approximately $3,015, the current value of the company's portfolio is about $10.74 billion. The intensified price drop explains the billions of dollars in unrealized losses mentioned in the report.

Disadvantages of DAT Compared to ETF

One of the main criticisms of the DAT structure is its fee mechanism. The 10xResearch report points out that, unlike the transparent, low-cost structure of ETFs that trade close to NAV, digital asset financial companies face additional costs due to complex and hedge fund-like fees. The report emphasizes that many investors often only notice these hidden costs when comparing them to Bitcoin and Ethereum ETFs from certain leading platforms that charge only a 0.25% management fee.

Potential Impacts of Ethereum Staking

According to analysis, asset management giants applying for staking features in their Ethereum ETFs have also increased the pressure on the DAT model. This initiative, aimed at providing a low-cost source of returns, is expected to raise further questions about the economic sustainability of DAT.

Tom Lee, the leader of Bitmine, recently stated that the recent weakness in the cryptocurrency market may stem from gaps in the balance sheets of one or more market makers. Lee believes that clever “sharks” might be driving down BTC prices by triggering liquidations. However, Lee emphasized that this is just a short-term pain, and Wall Street's vision for Ethereum remains unchanged.