Ethereum financial company Bitmine suffers huge losses, DAT model under pressure

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

Digital asset trust (DAT) companies have once again become a focal point of discussion amid the significant decline in the cryptocurrency market over the past year and a half. According to analysis, MicroStrategy investors have had to endure a shrinkage of about $20 billion in net asset value (NAV) since the company began purchasing Bitcoin. A substantial portion of these losses resulted from the accumulation of BTC at high prices during the November to December 2024 period.

Similar pressure has also emerged within Ether-focused DAT structures. According to research by 10xResearch, Bitmine has suffered a loss of over $1,000 per ETH due to the decline in ETH’s price. This drop has led to approximately $3.7 billion in unrealized losses on the company’s balance sheet. The analysis notes that this situation is characterized by the premium (the difference between trading price and NAV) rapidly dropping to zero, making it impossible for investors to exit unscathed.

Public data shows that Ether finance company Bitmine holds 3.56 million Ether (ETH). At the time of writing, with ETH trading at around $3,015, the current value of the firm’s portfolio is approximately $10.74 billion. The intensified price decline explains the billions of dollars in unrealized losses within this massive asset position mentioned in the report.

A fundamental criticism of the DAT structure concerns its fee mechanism. The 10xResearch report points out that, unlike ETFs—which are transparent, low-cost, and trade very close to NAV—digital asset trust companies incur additional costs due to their complex hedge fund-style fee structures. The report emphasizes that many investors only become aware of these hidden costs when comparing them to the Bitcoin and Ether ETFs from certain well-known asset management companies (which charge only a 0.25% management fee).

According to the analysis, a major asset management firm’s application to include staking features in its Ether ETF has further increased pressure on the DAT model. This move, aimed at providing a low-cost source of yield, is expected to prompt further questions about the economic sustainability of DATs.

Bitmine founder Tom Lee stated that the recent weakness in the cryptocurrency market may stem from gaps in the balance sheets of one or more market makers. Lee claimed that “sharks” who see opportunities are pushing BTC prices down by triggering liquidations. However, Lee emphasized that this is only short-term pain and that Wall Street’s vision built on Ethereum remains unchanged.