Shares in BitMine Immersion Applied sciences managed to finish a uneven day of buying and selling at a slight acquire after the crypto treasury firm turned the newest goal of brief vendor Kerrisdale Capital.
Kerrisdale said in a report on Wednesday that Tom Lee’s BitMine is “chasing a mannequin that’s on its solution to extinction,” because it took a short position on the corporate, a wager that its inventory would fall.
Kerisdale argued BitMine’s technique of promoting shares at a premium to buy Ether (ETH) and develop its token-per-share metric is now not efficient, and the corporate’s worth in comparison with its crypto holdings is narrowing.
BitMine is a Bitcoin (BTC) mining firm that modified its technique earlier this 12 months to amass massive quantities of ETH and has develop into the most important public holder of the token. Kerrisdale pins Bitmine’s tokens-per-share at 9 Ether per 1,000 shares, with the corporate holding 2.83 million ETH price over $12.5 billion.
It’s one in all dozens of crypto treasury companies which are shopping for large quantities of crypto within the hopes of attracting investor consideration.
BitMine didn’t instantly reply to a request for remark.
BitMine shares finish Tuesday at a acquire
Buyers wavered initially because the inventory opened above $60 however fell by over 5% in early buying and selling to a every day low of $57.41 after Kerrisdale’s report. Nevertheless, shares in BitMine (BMNR) ended buying and selling on Tuesday up 1.35% at $60 and continued to achieve 0.4% after the bell.
Kerrisdale has targeted different crypto corporations, together with Bitcoin miner Riot Platforms and Bitcoin-buying agency Technique.
On the time, Riot rebuffed Kerrisdale’s report, telling Cointelegraph that it made “unsound conclusions.” Technique didn’t immediately reply to its brief vendor report, however Chair Michael Saylor has lengthy touted the corporate’s attractiveness to traders.
Stock issuance is making traders fatigued, Kerrisdale claims
In its report, Kerrisdale additionally criticized BitMine’s tempo of inventory choices, noting that the agency had raised $10 billion over the past three months primarily by way of at-market share gross sales.
“The sheer velocity of BMNR’s inventory issuance has turned early enthusiasm into fatigue, with traders conditioned to consider each rally will likely be met by extra provide,” Kerrisdale mentioned.
It mentioned that BitMine’s $365 million share offering in late September was “a reduced giveaway” and argued the deal was “a cleverly packaged dilutive increase that sacrificed long-term credibility for short-term money.”
Tom Lee is not any Michael Saylor, says Kerrisdale
Kerrisdale additionally swiped at BitMine’s government chair Lee, claiming that whereas he “brings title recognition” to the corporate, “he doesn’t command the type of cult-like following that turned Michael Saylor right into a meme-stock icon capable of difficulty billions in fairness with out dropping investor enthusiasm.”
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It added that BitMine’s technique wants “shortage, charisma, and presumably one thing extra revolutionary” than at-market inventory issuance, however claimed the corporate “provides none of those.”
Kerrisdale additionally criticized different areas of BitMine’s enterprise, claiming it stopped reporting on its web asset worth (NAV) per share as its development slowed and the premium on its a number of of web asset worth (mNAV) fell from over 2.0x in August to 1.2x by September.
“BMNR’s pitch rests on the concept that it will possibly ship greater than the token alone,” it wrote. “But the technique is generic, the competitors is mushrooming, disclosures have grown opaque, ETH-per-share has slowed, and capital raises promoted as ‘premium’ are in actuality dilutive.”
The corporate mentioned its focusing on of BitMine is “not a wager towards Ethereum itself, however slightly one towards the notion that traders ought to nonetheless pay a market premium for it.”
“If you need ETH, simply purchase it immediately, stake it with minimal friction, or maintain it in one of many quickly proliferating ETFs,” it argued.
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