Short seller Culper Research is betting towards ether (ETH) and ETH-linked shares resembling BitMine (BMNR), arguing that the community’s economics deteriorated following Ethereum’s newest community improve.
The agency said in a Thursday report that the December 2025 improve dubbed Fusaka flooded the community with extra blockspace and has “impaired ETH tokenomics.” That drove transaction charges sharply decrease. As a result of validators earn a part of their revenue from these charges, the drop has decreased staking yields.
That dynamic might create a damaging suggestions loop, the report mentioned, the place declining validator yields cut back staking demand and community safety.
The report additionally highlighted that Ethereum co-founder Vitalik Buterin bought almost 20,000 ETH, value round $40 million at present costs, this 12 months, citing information from blockchain sleuth Lookonchain.
“Vitalik is promoting, whereas bulls like Tom Lee are clueless as to ETH’s new actuality,” the report mentioned. “We’re with Vitalik.”
The report pushes again on bullish claims from Lee, chairman of Ethereum-centric treasury agency BitMine, who has pointed to rising transaction counts and lively addresses as proof of stronger community fundamentals.
Culper mentioned these metrics are deceptive. Its evaluation claimed a big share of the exercise surge stems from handle poisoning assaults, a rip-off tactic the place attackers ship small transactions to trick customers into copying malicious pockets addresses. Culper estimated Ethereum charges have dropped roughly 90% because the improve.
“By Lee’s personal logic, if utility is NOT going up, then ETH is in a loss of life spiral,” the report mentioned. “This is precisely what we imagine is taking place.”
The brief thesis additionally focused BitMine (BMNR), one of many largest company consumers of ether.
Since July, the corporate has collected roughly 4.4 million ETH as a part of its treasury technique. With ether costs down considerably from latest highs, these holdings are estimated to be 45% underwater, with BitMine sitting on roughly $7.4 billion in unrealized losses, DropsTab data exhibits.
BitMine didn’t return a request for remark by press time.
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