Bitmine Immersion Technologies (BMNR) saw its stock surge over 5% on Tuesday after Ethereum (ETH-USD) jumped another 6%, trading above $4,500. This surge coincides with the company's announcement of plans to issue up to $20 billion worth of stock to further increase its Ethereum holdings.
Led by investor Tom Lee, Bitmine revealed on Monday that its ETH holdings totaled $4.96 billion, representing over 1.15 million tokens. This means the company owns approximately 1% of all ETH tokens in circulation. Bitmine aims to eventually control 5% of the total ETH supply.
The announcement propelled the stock up over 14% on Monday and it's up over 750% year-to-date. According to a press release, Tom Lee stated, "We are leading crypto treasury peers by both the velocity of raising crypto NAV per share and by the high trading liquidity of our stock."
Bitmine joins a growing number of cryptocurrency "treasury companies," a strategy popularized by Michael Saylor's Strategy (MSTR), which holds significant amounts of Bitcoin. These companies essentially issue stock and use the proceeds to purchase cryptocurrencies that are then held on their balance sheets.
Coinbase (COIN), another major ETH market participant, also experienced a boost, with shares up over 2% in premarket trading on Tuesday. Coinbase operates a large transaction-processing chain on Ethereum and holds over 100,000 ETH tokens, valued at over $500 million, according to Coindesk.
The crypto treasury strategy has attracted diverse companies, including GameStop (GME), which announced its intent to hold Bitcoin in March.
Is this the future of corporate finance?
The trend of companies holding significant cryptocurrency reserves raises interesting questions about corporate finance and investment strategies. The volatility of cryptocurrencies presents both opportunities and risks for these companies and their shareholders.