The Ethereum finance company Bitmine faces huge unrealized losses.

Source: BTCHaber Original Title: Ether treasure company Bitmine suffers heavy losses Original Link:

Digital asset finance companies face market pressure

Digital Asset Treasury Company (DAT) has re-emerged as a focal point of discussion due to significant losses in the cryptocurrency market over the past month and a half. According to analysis, MicroStrategy investors have absorbed approximately $20 billion in net asset value (NAV) loss since the company began purchasing BTC. A significant portion of these losses stems from BTC reserves purchased at high prices during the period from November to December 2024.

Bitmine's Ethereum-related losses

Similar pressures are also present in the Ethereum-centric DAT structure. According to research by 10xResearch, Bitmine suffered losses due to the decline in ETH prices, with losses exceeding $1,000 per ETH. This drop resulted in approximately $3.7 billion of unrealized losses on the company's balance sheet. Analysis indicates that this situation is characterized by a premium (the difference between price and NAV) rapidly declining to zero, creating a structure from which investors cannot exit without incurring losses.

Ethereum Asset Scale

Recent public data shows that Ethereum asset company Bitmine holds 3.56 million Ethereum (ETH). At the time of writing, considering that ETH is trading around $3015, the company's portfolio is currently valued at approximately $10.74 billion. The intensified price decline explains the billions of dollars in unrealized losses mentioned in the report regarding this huge asset position.

Cost Disadvantages Compared to ETFs

One of the main criticisms of the DAT structure is its fee mechanism. The 10xResearch report points out that ETFs are characterized by transparency, low costs, and trading prices close to NAV, while digital asset finance companies face additional cost pressures due to complex fees and a hedge fund-like fee structure. The report notes that many investors often only realize these hidden costs when comparing them to BlackRock's Bitcoin and Ethereum ETFs, which charge a 0.25% management fee.

Potential Impact of Ethereum Staking Approval

According to the analysis, asset management giant BlackRock's application for staking functionality in its Ethereum ETF has also intensified pressure on the DAT model. This initiative, aimed at providing a low-cost source of returns, is expected to further raise questions about the economic sustainability of DAT.

Market View

Tom Lee, the CEO of Bitmine, has stated that the recent weakness in the crypto market may stem from gaps on the balance sheets of one or more market participants. Lee pointed out that “sharks” taking advantage of this situation are triggering liquidations in an attempt to drive down BTC prices. However, Lee emphasized that this is just short-term pain, and the vision that Wall Street is building around Ethereum has not changed.

This article does not constitute investment advice or recommendations. All investment and trading activities carry risks, and readers should conduct their own research before making decisions.