Tom Lee defends BitMine Immersion strategy as ether slump widens paper losses to $6 billion

Despite deepening market losses, BitMine Immersion has intensified its Ethereum accumulation, highlighting what it sees as a disconnect between price and on-chain fundamentals.

BitMine ramps up ether purchases amid sell-off

BitMine Immersion Technologies (BMNR) extended its weekly buying program last week, adding 41,788 ETH even as the broader crypto market sold off sharply. The latest purchase, disclosed in a Monday update, marks the company's largest weekly token acquisition of 2024 so far.

The new tranche, worth roughly $96 million at current prices, lifted the firm's total ETH stash to 4,285,125 tokens. That represents about 3.55% of Ethereum's circulating supply, underscoring the company's role as the largest Ethereum-focused treasury player. However, the aggressive buying has come as prices weaken, intensifying scrutiny of the strategy.

Alongside its ether position, the firm also holds 193 BTC, $586 million in cash, a $200 million equity stake in Beast Industries and a $20 million stake in Eightco Holdings. Moreover, the combined portfolio concentration in Ethereum leaves the company highly exposed to market swings.

Market downturn drives multi-billion dollar paper losses

Ether fell to around $2,300 over the weekend, dragging the value of BitMine's aggregated crypto, cash and equity holdings down to about $10.7 billion. By Monday morning U.S. trading, the ETH price had recovered slightly to $2,360, but the rebound did little to offset the broader drawdown.

With last week's steep slide in digital asset prices, the company is now estimated to be sitting on roughly $6 billion in unrealized losses on its Ethereum position. That said, management continues to frame the drawdown as a long-term volatility event rather than a thesis-breaking development.

Public-market investors have reacted more cautiously. BMNR shares were down about 5% in early U.S. trading on Monday, sending the stock to fresh seven-month lows. However, the company has not signaled any intention to slow its acquisition pace or reweight its asset mix.

On-chain activity diverges from ether price

Chairman Thomas Lee argued that the current downturn differs from earlier crypto winters, pointing to robust Ethereum blockchain activity despite the price slump. He said that daily transactions and active addresses have recently hit record highs, even as ETH trades well below prior peaks.

"During the crypto winter of 2021-2022 or 2018-2019, Ethereum transaction activity and active wallets declined, which is counter to what we have seen in the past 12 months," Lee noted. Moreover, he framed the current environment as a structural shift rather than a repeat of previous bear markets.

According to Lee, lingering aftershocks from October's crypto crash continue to weigh on sentiment. He also highlighted the recent surge in precious metals prices as a competing draw for capital, arguing that this has siphoned liquidity away from the digital asset ecosystem.

Staking strategy and revenue generation

In parallel with its accumulation strategy, BitMine has aggressively increased its staking footprint on the Ethereum network. The firm has now staked nearly 2.9 million ETH, representing about two-thirds of its total holdings, according to the latest update.

This staked position is projected to generate an estimated $188 million in annualized staking revenue, providing a yield-based income stream that partially offsets mark-to-market volatility. However, the heavy commitment to staking also underscores the company's long-duration bet on Ethereum's security model and ongoing network usage.

Executives have presented the combined accumulation and staking approach as a deliberate long-term strategy. They argue that the current dislocation between price and network activity, particularly for bitmine immersion, could eventually reverse as liquidity conditions stabilize across digital and traditional markets.

Outlook as volatility persists

BitMine's position leaves it highly sensitive to further swings in ETH, both on its balance sheet and in investor perception. However, management continues to emphasize fundamentals such as on-chain activity, staking rewards and Ethereum's share of smart contract usage.

As of the latest update on Monday, the company is maintaining its weekly purchase pattern despite deep paper losses and pressure on BMNR stock. In summary, BitMine is doubling down on its Ethereum-centric thesis, betting that current price weakness will ultimately give way to renewed upside as the cycle evolves.