Bitmine (BMNR), the Ethereum treasury company co-founded by Tom Lee, filed a 9.5% annual dividend perpetual preferred stock offering with the SEC on Wednesday, aiming to raise up to $300 million. The move replicates the funding scheme that Strategy has made popular in the crypto treasury sector. But does this model really stand the test of the market?
In brief
- Bitmine is offering 3 million Series A shares at $100 each, with an annual dividend of 9.5% paid weekly.
- The securities will be listed on the NYSE under the symbol BMNP, subject to approval.
- The price of ETH, which has fallen below $1,800, currently exposes Bitmine to an unrealized loss of around $9 billion on its holdings.
Bitmine takes over the Strategy manual
Tom Lee, co-founder of Fundstrat, chose to align with the financing strategy that Michael Saylor structured at Strategy (MSTR). Bitmine therefore issues 3 million Series A perpetual preferred shares, at $100 per share, with a dividend rate of 9.5% per year. Payment, weekly, remains conditional on a decision of the board of directors.
This operation is part of a broader trend: several digital asset treasury companies are now using hybrid instruments to diversify their sources of capital.
Strategy itself launched several classes of preferred stock, while Strive (ASST) followed with its own SATA securities. Bitmine intends to apply this logic to its Ethereum pocketaccumulated to the tune of more than 5.3 million ETH over the past year.
A risky bet against a backdrop of sectoral pressure
The timing of this lifting nevertheless raises questions. On Wednesday, Strategy's STRC preferred stock fell 5%, falling below its par value of $100, while Strive's SATA stock traded around $97.
Investors are questioning the ability of these companies to maintain their dividend payments in an environment of depressed prices.
Bitmine's exposure fully illustrates this risk. The company holds more than 5.3 million ETH acquired in part when Ethereum was trading around $5,000 last October. With the price falling below $1,800 at the time of filing, the unrealized loss exceeds $9 billion.
Moreover, Strategy itself recently sold 32 bitcoins for the first time since 2022, in part to finance its obligations linked to its own preferred shares, a signal which did not fail to worry the market.
The document filed with the SEC does not yet specify the allocation of the funds raised. BMNP shares, however, offer holders a right of redemption in the event of major structural changes, with premiums of between 0% and 10% depending on the exercise date.
In short, Bitmine is taking a path that Strategy has cleared, but in a sector where the margins for error are reduced. An unrealized loss of 9 billion on ETH, a dividend model under sectoral tension and a use of funds that is still unclear: these are the three unknowns that the market will now monitor. The next board meeting on dividends could tell if the bet holds up.
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