BitMine Chairman Tom Lee responded to the story about the company’s unrealized Ethereum financial losses by claiming that this was part of the design.
BitMine’s Ethereum Holdings suffered notable losses after the crash.
The digital asset sector saw major declines last week, with Ethereum being one of the worst-hit assets, down nearly 25%. As a result of this decline, BitMine, the largest corporate holder of ETH, saw its reserves suffer significant losses.
BitMine is still a relatively new company in the financial world, having only adopted Ethereum on its balance sheet in June of last year. Despite the short period it has to execute its strategy, the company has already amassed a significant amount of cryptocurrency. As of Monday’s press release, BitMine holds 4,285,125 ETH, equivalent to 3.55% of the asset’s total circulating supply.
However, since BitMine began buying shortly after the ETH bull rally, many tokens have been purchased at much higher levels than they are currently. The company’s holdings were already suffering losses due to the market downturn caused by rising prices, and the recent price crash has further expanded its holdings.
Discussions surrounding BitMine’s unrealized Ethereum losses of more than $6 billion began circulating on social media, with some users criticizing the finance company. Chairman Thomas “Tom” Lee addressed the topic by quoting the user in his X post.
Lee said the criticism “misses the point of Ethereum vaults,” explaining that BitMine is designed to track the price of ETH and beat it over a cycle. With the market currently in a recession, unrealized losses on the company’s holdings would be expected during such a period, he added.
The chairman insisted that this was a “feature” and not a bug. He compared the company’s situation to an index exchange-traded fund (ETF) and said, “Should we call out the losses of all index ETFs?”
During this downturn, BitMine has been pushing staking to generate passive income by quickly cutting off supply from Ethereum staking contracts. To date, the company holds 2,897,459 ETH, equivalent to approximately 67% of its holdings.
The recent market downturn has been so severe that even long-standing strategies are threatened with profit loss, and Bitcoin is currently trading right at cost. Strategy is the world’s largest digital asset treasury, holding 713,502 BTC, but if the cryptocurrency loses $76,000, its massive $54.3 billion holdings will be underwater.
ETH price
Ethereum fell to a low of $2,100 on Tuesday, but has since bounced back to $2,250.
The trend in the price of the coin over the last five days | Source: ETHUSDT on TradingView
Featured image of Dall-E, chart from TradingView.com
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