Thomas Lee's BitMine is selling $300 million in perpetual preferred stock yielding 9.5% to buy more Ethereum, even as its unrealized losses on ETH exceed $8.5 billion. The move tests whether staking revenue can support corporate debt. This bold strategy has sparked debate among institutional investors and crypto analysts, who see both a high-yield opportunity and a potential over-leverage trap.
The Signal
BitMine, the largest public Ethereum treasury firm, announced on June 3 it will issue 3 million shares of 9.50% Series A perpetual preferred stock at $100 par value. The offering, led by Moelis & Company and Cantor, is expected to trade on the NYSE under ticker BMNP. Proceeds will fund additional ETH purchases, staking infrastructure, working capital, and common stock buybacks. The company currently holds over 5.3 million ETH — roughly 4.5% of circulating supply — and a large portion is staked. But the timing is fraught: ETH's price has fallen well below BitMine's average purchase price, resulting in unrealized paper losses exceeding $8 billion, according to CryptoQuant data.
Context is critical. BitMine accumulated its treasury primarily during the 2021-2022 bull market, with an estimated average purchase price around $3,500 per ETH. With ETH trading near $2,100, the unrealized losses are monumental. However, the company generates significant staking income, as most of its holdings are staked. According to the prospectus, annualized staking revenue is in the hundreds of millions, making the $28.5 million annual dividend obligation relatively manageable. But the key question is whether this income is sustainable and whether ETH price will recover enough to avoid a liquidity crisis. The offering also includes a provision that dividends may be paid from cash, staking income, securities sales, or future financing — not a dedicated revenue stream. Staked ETH may be unavailable for withdrawal during stress, adding risk.
“BitMine is betting that Ethereum staking yields can cover the 9.5% dividend, but the risk is that ETH price continues to slide, deepening the hole and eroding investor confidence.”
On-Chain Data
- Unrealized Losses: Over $8.5 billion in paper losses on ETH holdings, per BitMine's filing, as ETH trades below average cost basis. This represents approximately 60% of the market value of its holdings.
- ETH Holdings: 5.3 million+ tokens, representing ~4.5% of circulating supply. This concentration gives BitMine market influence but also significant price risk.
- Staking Revenue: Annualized staking income in the hundreds of millions, making the ~$28.5 million annual dividend obligation relatively small. However, this income depends on Ethereum's staking rate, currently around 3-4% annualized.
- Use of Proceeds: General corporate purposes including additional ETH purchases, validator expansion, working capital, and strategic investments. No specific allocation for dividend payments adds uncertainty.
A deeper look at on-chain data reveals that BitMine has been steadily accumulating ETH over recent months despite losses. Addresses associated with the firm show regular inflows from exchanges and OTC platforms. This suggests the company believes the current price is an attractive long-term entry point. However, it could also be interpreted as a dollar-cost averaging strategy that could backfire if the market continues its downtrend. The staking yield is also under pressure: as more ETH is staked, the yield decreases. If BitMine's staking income falls below the dividend obligation, the company may need to sell ETH or other assets to cover payments, potentially exacerbating price declines.
Market Impact
The preferred stock offering is a double-edged signal. On one hand, it shows confidence that staking yields can service debt. A study by Everstake found that staking accounted for 60% of disclosed revenue among public ETH treasury firms in 2025. This supports the thesis that ETH staking can generate steady income. Additionally, the 9.5% yield is attractive in a low-rate environment where government bonds yield under 3%.
However, BitMine's filing warns that dividends may be paid from cash, staking income, securities sales, or future financing — not a dedicated revenue stream. Staked ETH may also be unavailable for withdrawal during stress. The 9.5% yield is attractive in a low-rate environment, but if ETH price drops further, the equity value erodes and the dividend burden grows relative to the company's market cap. The market reaction has been cautious: BitMine's common stock fell 2% after the announcement, while the preferreds have yet to trade. Analysts are divided: some see the issuance as a sign of strength, while others view it as a desperate move to prop up ETH price.
Your Alpha
- 1Track BitMine's staking yield: If annualized staking revenue falls below $28.5 million, the dividend coverage becomes questionable. Monitor quarterly reports and compare with the network average staking yield. A sustained drop below 3% annualized would be a red flag.
- 2Watch ETH price action: The offering is a leveraged bet on ETH recovery. A continued decline will amplify unrealized losses and may pressure the preferred stock price. Set a mental stop-loss for BMNP: if ETH drops below $1,800, consider reducing exposure.
- 3Compare with Bitcoin treasury plays: MicroStrategy uses convertible bonds; BitMine uses preferred stock. The risk profiles differ — preferreds have fixed obligations, while convertibles are less dilutive. Preferreds are more rigid: dividends are mandatory and cumulative, whereas convertibles can be converted to equity if the underlying asset rises. This makes BMNP riskier in a bear market.
Additionally, consider the macro context: the Federal Reserve has kept rates high, pressuring risk assets. If rates drop, ETH could benefit, but if they remain high, the opportunity cost of holding 9.5% preferreds diminishes. Also watch regulation: any move against staking or corporate treasuries could negatively impact BitMine.
Next Catalyst
The offering is expected to close within weeks, pending NYSE approval. Investor demand will signal market confidence in the corporate ETH treasury model. If BitMine uses proceeds to buy more ETH, it could provide short-term price support. Conversely, a weak reception could spook the market. A key catalyst will be the next quarterly report, revealing staking income and the impact of unrealized losses.
Additionally, Ethereum's staking yield (currently ~3-4% annualized) will evolve with network activity and validator economics. If yields compress, BitMine's income may not cover the 9.5% coupon. The upcoming Ethereum upgrade expected later this year, which could increase staking efficiency, is a factor to monitor.
The Bottom Line
BitMine's preferred stock offering is a bold but risky bet: issue 9.5% perpetual debt to accumulate more ETH while sitting on $8.5 billion in unrealized losses. The strategy works only if staking income remains robust and ETH price recovers. Investors should weigh the 9.5% yield against the risk of further ETH downside. The key lies in staking revenue and BitMine's ability to manage its exposure. In an optimistic scenario, the company could emerge stronger; in a pessimistic one, it could face a liquidity crisis. Time will tell whether this bet is genius or reckless.
