BitMine sets 5% Ether supply hard cap as accumulation target nears

What happened

BitMine Immersion Technologies will stop buying Ether once its holdings reach 5% of the cryptocurrency's supply, Chairman Tom Lee said during a keynote at Token2049 in Singapore. He described the level as a hard cap and said the company would not own more than 5% of Ethereum.

Lee said BitMine is nearing that threshold after accumulating roughly 6 million Ether, or about 4.9% of the supply, and needs about 100,000 ETH more to reach the target.

CoinGape reported that BitMine holds 6,016,414 ETH after purchasing $41 million worth of Ethereum the previous week. LookonChain noted an additional 12,500 ETH purchase on October 5 on the BitGo exchange.

BMNR stock was down 4.58% in pre-market trading at press time, CoinGape reported.

Why it matters

Lee linked the 5% cap to BitMine's capital strategy. He said that with a hard cap in place, the company will not need to raise capital to keep buying Ether, and he said the shares would outperform ETH on the way up.

Analyst Nathan Frankovitz said BitMine could expand Ethereum's opportunity set.

The value of BitMine's Ether holdings fell to $15.56 billion, the lowest reading since September 20, and the company was sitting on an unrealized loss of $4.49 billion on those holdings, per DropsTab. Ethereum traded below $2,600.

What the data shows

BitMine holds 6,016,414 ETH, which CoinGape valued at $15.56 billion, and its unrealized loss on the position was $4.49 billion, per DropsTab. Ether traded below $2,600. Cantor Fitzgerald's BMNR target is $63.60.

Background

BitMine has used capital markets to build the treasury. In June it launched a $300 million perpetual preferred stock offering, and by early August it had repurchased 16.1 million common shares under a $4 billion buyback program.

Lee had earlier left open the chance of holding more than 5% depending on Ethereum adoption, and told Bankless in August that the company may revisit the idea in 2027.

What is still unclear

• The reports do not say whether Ether earned through staking counts toward the 5% cap. Lee previously said BitMine could sell ETH earned through staking to prevent its share of supply from rising above 5%.

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