Short seller Kerrisdale Capital accuses BitMine of “dilutive tactics” and fading investor appeal as the Ether-heavy firm faces scrutiny over its aggressive equity sales.
BitMine Faces Sharp Volatility After Short Seller Attack
BitMine Immersion Technologies experienced a volatile trading session after Kerrisdale Capital released a critical report targeting the company’s crypto treasury model. The short seller accused BitMine of pursuing an “unsustainable strategy” reliant on issuing new stock to buy Ether (ETH), arguing that investor enthusiasm is fading as dilution increases.
Despite the report, BitMine shares managed to close Tuesday up 1.35% at $60, rebounding from an early dip of over 5%. The stock gained another 0.4% in after-hours trading.
Kerrisdale took a short position against BitMine (BMNR), claiming the firm’s “token-per-share” growth model is nearing obsolescence. “BitMine is chasing a model that is on its way to extinction,” the firm wrote, asserting that the company’s market value no longer justifies its Ether holdings.
BitMine — originally a Bitcoin mining company — shifted focus earlier this year to accumulating large Ether reserves, becoming the largest public holder of ETH with 2.83 million tokens worth roughly $12.5 billion.
However, Kerrisdale criticized the company’s $10 billion raised through at-market share sales in recent months, calling the strategy “a cleverly packaged dilutive raise.” The report argued that frequent stock offerings are exhausting investor confidence, conditioning markets to expect new supply after every rally.
“The sheer velocity of BMNR’s stock issuance has turned early enthusiasm into fatigue,” Kerrisdale stated.
Leadership and Valuation Under Fire
Kerrisdale also targeted executive chair Tom Lee, suggesting that while he brings recognition, he lacks the “cult-like following” that helped Michael Saylor of Strategy maintain investor momentum.
The report further claimed BitMine stopped disclosing key metrics like net asset value (NAV) per share as its growth slowed, noting that its premium to NAV had fallen from 2.0x in August to 1.2x by September.
“BitMine’s pitch rests on the idea that it can deliver more than the token alone,” Kerrisdale said. “Yet the strategy is generic, competition is rising, and disclosures have grown opaque.”
While Kerrisdale insists its short position isn’t against Ethereum, it questions whether investors should pay a premium for indirect exposure. The firm concluded:
“If you want ETH, just buy it directly or through one of the new ETFs.”
BitMine’s short-term rebound suggests traders aren’t ready to abandon the firm yet — but Kerrisdale’s critique underscores the mounting pressure on crypto treasuries to prove their value beyond holding digital assets.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.