BitMine stocks trade choppy after Kerrisdale short seller report

Shares successful BitMine Immersion Technologies managed to extremity a choppy time of trading astatine a flimsy summation aft the crypto treasury institution became the latest people of abbreviated seller Kerrisdale Capital.

Kerrisdale said successful a study connected Wednesday that Tom Lee’s BitMine is “chasing a exemplary that is connected its mode to extinction,” arsenic it took a short position connected the company, a stake that its banal would fall.

Kerisdale argued BitMine’s strategy of selling shares astatine a premium to acquisition Ether (ETH) and turn its token-per-share metric is nary longer effective, and the company’s worth compared to its crypto holdings is narrowing. 

BitMine is simply a Bitcoin (BTC) mining institution that changed its strategy earlier this twelvemonth to get ample amounts of ETH and has go the largest nationalist holder of the token. Kerrisdale pins Bitmine’s tokens-per-share astatine 9 Ether per 1,000 shares, with the institution holding 2.83 cardinal ETH worthy implicit $12.5 billion.

It’s 1 of dozens of crypto treasury companies that are buying immense amounts of crypto successful the hopes of attracting capitalist attention.

BitMine did not instantly respond to a petition for comment.

BitMine shares extremity Tuesday astatine a gain

Investors wavered initially arsenic the banal opened supra $60 but fell by implicit 5% successful aboriginal trading to a regular debased of $57.41 aft Kerrisdale’s report. However, shares successful BitMine (BMNR) ended trading connected Tuesday up 1.35% astatine $60 and continued to summation 0.4% aft the bell.

Kerrisdale has targeted different crypto companies, including Bitcoin miner Riot Platforms and Bitcoin-buying steadfast Strategy. 

At the time, Riot rebuffed Kerrisdale’s report, telling Cointelegraph that it made “unsound conclusions.” Strategy didn’t straight respond to its abbreviated seller report, but Chair Michael Saylor has agelong touted the company’s attractiveness to investors.

BitMine’s stock terms saw important swings connected Tuesday aft Kerridale’s abbreviated seller report. Source: Google Finance

Stock issuance is making investors fatigued, Kerrisdale claims

In its report, Kerrisdale besides criticized BitMine’s gait of banal offerings, noting that the steadfast had raised $10 cardinal implicit the past 3 months chiefly done at-market stock sales.

“The sheer velocity of BMNR’s banal issuance has turned aboriginal enthusiasm into fatigue, with investors conditioned to judge each rally volition beryllium met by much supply,” Kerrisdale said.

It said that BitMine’s $365 cardinal stock offering successful precocious September was “a discounted giveaway” and argued the woody was “a cleverly packaged dilutive rise that sacrificed semipermanent credibility for short-term cash.”

Tom Lee is nary Michael Saylor, says Kerrisdale

Kerrisdale besides swiped astatine BitMine’s enforcement seat Lee, claiming that portion helium “brings sanction recognition” to the company, “he does not bid the benignant of cult-like pursuing that turned Michael Saylor into a meme-stock icon capable to contented billions successful equity without losing capitalist enthusiasm.”

Source: Kerrisdale Capital

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It added that BitMine’s strategy needs “scarcity, charisma, and presumably thing much innovative” than at-market banal issuance, but claimed the institution “offers nary of these.”

Kerrisdale besides criticized different areas of BitMine’s business, claiming it stopped reporting connected its nett plus worth (NAV) per stock arsenic its maturation slowed and the premium connected its aggregate of nett plus worth (mNAV) fell from implicit 2.0x successful August to 1.2x by September.

“BMNR’s transportation rests connected the thought that it tin present much than the token alone,” it wrote. “Yet the strategy is generic, the contention is mushrooming, disclosures person grown opaque, ETH-per-share has slowed, and superior raises promoted arsenic ‘premium’ are successful world dilutive.”

The institution said its targeting of BitMine is “not a stake against Ethereum itself, but alternatively 1 against the conception that investors should inactive wage a marketplace premium for it.”

“If you privation ETH, conscionable bargain it directly, involvement it with minimal friction, oregon clasp it successful 1 of the rapidly proliferating ETFs,” it argued.

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