Ethereum reserve enterprise Bitmine (stock code BMNR) plummeted nearly 12% yesterday, with its filing revealing the cost and unlocking time of early investors, triggering a panic sell-off. But is it really so? This article will help you understand how crypto reserve enterprises are valued and what information is most easily misunderstood or difficult to obtain.
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ToggleHow Low is the Cost of Initial Investors?
The filing revealed that BitMine issued an additional 60,674,098 common shares after transforming into an Ethereum reserve company (assuming full exercise), which potentially dilutes its original issued shares by 58.8%.
Various original investors, including private investors in PIPE agreements initially invested with a mix of cash and cryptocurrencies, as well as strategic consultants and placement agents, can subscribe to BMNR stocks at extremely low exercise prices ranging from $4.5 to $10. Although BMNR dropped nearly 12% yesterday, calculated at its closing price of $35.11, they still have gains ranging from 2.5 to 6.8 times.
However, looking closely at the exercise date restrictions, except for a few warrant representatives who can exercise on 12/1, most are already open for exercise or have already expired. It is estimated that most initial investors have already converted to common stocks. Whether this was the source of yesterday's selling pressure, the author believes it was merely caused by investor panic.
Undeniably, these early investors' costs, whether in cryptocurrencies or cash, are incredibly low. ABMedia previously analyzed how Justin Sun invested 365 million TRX in TRON, gaining a staggering $3.8 billion in profits. These "treasury companies" have become arbitrage exits for crypto whales.
(Justin Sun's TRON Rings Nasdaq Bell, TRX Arbitrage Reaches $3.8 Billion)
How are Crypto Reserve Enterprises Valued?
Crypto reserve enterprise valuations heavily depend on the following factors:
- Number of cryptocurrencies purchased
- Cryptocurrency prices
- Company stock price
- Shares outstanding
The author most commonly uses the mNAV or NAV premium calculation formula:
Market Cap ÷ Crypto NAV (Value of held cryptocurrencies)
=Stock Price ÷ (Cryptocurrency holdings per share × Coin Price)
=Stock Price ÷ [(Total Cryptocurrency Holdings ÷ Number of Shares) × Coin Price]
Note: This ignores convertible debt or preferred stock debt amounts
The most difficult information to obtain is the number of shares issued, as many crypto reserve enterprises raise funds by rapidly issuing new shares, but press releases may not disclose outstanding shares or fully diluted shares, making assessment difficult. This is why many crypto reserve enterprises see initial stock price surges, but when investors discover significant overvaluation, they perform massive valuation corrections.
Is BitMine's Valuation Reasonable?
BitMine currently holds 566,766 ETH and 192 BTC. According to Tom Lee's speech, the fully diluted shares are 117.6 million. Ignoring its Bitcoin value, the mNAV is 1.9.
(Tom Lee Discusses Ethereum Alchemy, BitMine Drops 12% for Valuation Correction)
However, calculated with the fully diluted shares of 163.88 million from this filing, the mNAV is 3.05.
As can be seen, differences in fully diluted shares significantly affect the company's valuation.
Risk Warning
Cryptocurrency investments carry high risks, and prices may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.
One of the world's largest online brokers, Interactive Brokers, is considering launching a stablecoin to enable round-the-clock fund deposits and crypto asset transfers, aiming to reshape the real-time and flexibility of fund flows between brokers and users. This becomes the latest case following multiple traditional financial institutions' entry into the crypto field.
ToggleInteractive Brokers Considers Launching Stablecoin: Difficult to Determine Value, But Should Participate First
According to a Reuters report, brokerage giant Interactive Brokers is actively evaluating the feasibility of launching a stablecoin. Founder and Chairman Thomas Peterffy stated in an interview that the company is exploring how to provide 24-hour instant fund deposits and crypto asset transfer services for user accounts through a stablecoin, symbolizing traditional brokers' further expansion into blockchain infrastructure:
Currently, we have not yet decided on the specific form of the stablecoin. In addition to issuing our own, we may also integrate stablecoins issued by other institutions, provided that they have sufficient market credibility.
Even as he begins exploring stablecoin applications, Peterffy remains cautious about stablecoins and crypto assets: "It's difficult to determine the fundamental value of cryptocurrencies, but if the public accepts this value, I can accept it too." This reveals Interactive Brokers' cautious and open strategy towards digital assets, neither rejecting innovation nor overly investing.
(Bank of America: Stablecoin Market Cap to Increase by $75 Billion in the Short Term, GENIUS and Institutions Set the Tone)
From Trading, Custody to Investment: Interactive Brokers' Crypto Layout Has Been in Place for Years
In fact, this is not Interactive Brokers' first venture into the crypto market. As early as 2021, the company opened trading and custody functions for BTC, ETH, LTC, and BCH. In March this year, it further supported SOL, ADA, XRP, and DOGE, showing its continuously expanding inclusivity of crypto assets.
Moreover, Interactive Brokers is also an investor in the crypto trading platform Zero Hash and works closely with stablecoin issuer Paxos. These layouts pave the way for its stablecoin product, which may collaborate with Paxos or other trusted institutions in the future to build on-chain transfer infrastructure.
GENIUS Act Supplements Regulatory Gaps, Traditional Brokers and Banks Rush In
The pivotal GENIUS Act, recently signed into law by the former president, provides a comprehensive regulatory framework for stablecoin issuance and operations, quickly attracting the attention and follow-up of crypto and traditional financial institutions, with Interactive Brokers clearly boarding this train.
Robinhood launched the stablecoin USDG last year in collaboration with Paxos; cross-border remittance leader Western Union has revealed plans to integrate stablecoins to enhance cross-border remittance efficiency. Hong Kong brokerage Futu Securities has recently been exposed to testing stablecoin deposit functions, allowing users to participate in stock market trading in various countries directly with USDT or USDC.
These cases show that stablecoins are not just a payment method in the crypto world, but are gradually becoming real-time cross-border tools or efficient clearing engines for traditional financial institutions, thereby providing users with more flexible fund management solutions.
(Anchorage Launches Compliant Stablecoin Issuance Platform, Partnering with Ethena to Introduce USDtb to the US)
Looking Ahead to Asset Tokenization, Brokers Integrating Blockchain Technology Becomes a Trend
With the increasing demand for stablecoins and the maturation of blockchain infrastructure and regulations, traditional brokers must redefine their roles. Interactive Brokers' active research into stablecoin applications represents not just a change in company strategy, but a microcosm of the entire financial industry's transition and integration towards on-chain operations.
(Coinbase Former CTO Balaji Discusses Crypto Utopia: 99% of World's Property Will Eventually Be Tokenized)
Risk Warning
Cryptocurrency investment carries high risks, and prices may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.
