BitMine Shares Surge 130% on Ethereum Strategy Announcement

BitMine Immersion Technologies shares experienced a significant surge, leading to two trading halts on Thursday. The company's stock price skyrocketed for the third consecutive day following an announcement earlier in the week regarding an Ethereum treasury strategy. The stock was initially halted shortly after 11 a.m. ET and then immediately halted again.

By the end of the trading day, BitMine shares closed at $135, marking a 130% increase from the previous day. However, the stock price fell to $118 during after-hours trading. Since the appointment of Fundstrat co-founder and CIO Tom Lee as the board chair on Monday, BitMine's shares have seen a remarkable rally, increasing nearly 1,900% from $6.

Lee, a frequent guest on financial news programs, discussed BitMine's strategy on "Squawk Box" this week. He highlighted that the firm plans to accumulate Ethereum in anticipation of a stablecoin boom, which is expected to drive demand for the asset. With regulatory frameworks for stablecoins progressing on Capitol Hill, Lee suggested that major banks like JP Morgan and Goldman Sachs may begin staking Ethereum in large quantities. This move would secure the network and support the issuance of billions of dollars in dollar-pegged tokens.

BitMine, which operates Bitcoin mining facilities in Texas and Trinidad, announced on Monday that it had raised $250 million through a private placement. Notable participants in this funding round included Peter Thiel’s Founders Fund, crypto venture capital firm Pantera, crypto prime broker FalconX, and crypto conglomerate Digital Currency Group, along with Lee himself. The transaction involved the purchase and sale of 55 million shares at $4.50 each. As of Thursday, BitMine had a float of 1.4 million shares, indicating that investors who participated in the private placement had substantial paper gains but were unable to trade their shares yet.

The recent performance of BitMine contrasts sharply with the experiences of other crypto treasury firms. For instance, shares of SharpLink Gaming, an Ethereum treasury firm, plummeted 70% after its registration-of-shares filing was deemed effective by the U.S. Securities and Exchange Commission. Similarly, Solana Treasury firm Upexi's stock also saw a significant decline following a similar filing.

BitMine's private placement shares are subject to restrictions, as stated in Monday's press release: "Shares from BitMine’s private placement ‘may not be offered or sold [...] except pursuant to an effective registration statement or an applicable exemption.’" The company aims to enhance shareholder value by increasing the amount of digital assets it owns per share, with a focus on Ethereum. BitMine also noted its access to staking and decentralized finance (DeFi) opportunities.

Lee is not the only prominent figure in the crypto treasury space. Jack Mallers, the founder of Strike, is leading the Tether-backed, Bitcoin-buying firm Twenty One Capital as CEO. Additionally, Anthony Pompliano, a well-known social media personality and entrepreneur, has established ProCap Financial, another Bitcoin treasury firm.