Bitmine plans $300M stock for ETH buys – Better than Strategy’s STRC?
Will Bitmine escape Strategy's challenges as it doubles down on preferred stock offering?
World’s largest Ethereum treasury firm Bitmine (Nasdaq: BMNR) plans to double down on Strategy’s rulebook with a Stretch [STRC]-like preferred stock.
On Wednesday, the 3rd of June, the firm said it will offer 3,000,000 series A preferred stock at $100 each with an annual dividend of 9.50%. That will translate to $300 million in capital if fully executed.
The Tom Lee-backed firm noted that the raised funds will be deployed for various uses, including ‘additional ETH buys.’
BMNR intends to use the net proceeds from the offering for general corporate purposes, which may include the acquisition of additional ETH and other digital assets; the expansion of the Company’s staking and validator infrastructure, including through MAVAN.
The funds may also be used for the company’s share repurchase program.
Bitmine’s STRC-like stock plan sparks debate
However, the update elicited mixed reactions, given the current Strategy’s situation.
According to analysts, Strategy could be forced to sell BTC to cover some of its immediate dividend obligations tied to its preferred stocks. In fact, the recent sell-off of 32 BTC effectively dragged BTC nearly to February lows of $60K.
Will Bitmine’s move face similar challenges and affect the ETH price too?
Other analysts called Bitmine’s update ‘poor timing’ given the ongoing strong negative sentiment against Strategy’s STRC, after the firm sold BTC.
For his part, macro analyst Alex Kruger believes that Bitmine has a better chance of survival than Strategy.
The problem with STRC is not STRC itself, but rather overdoing it, as Saylor did. Can also argue ETH has a higher capacity to generate yield, on-chain, to pay for the dividends, making it more sustainable than STRC.
Currently, Bitmine holds over 5.4 million ETH bought at an average price of $2,003. It acquired an extra 25K ETH as the altcoin slipped below $2K. However, the altcoin dropped below $1.8K, exposing Bitmine to nearly $9 billion in unrealized losses.
While broader market correction and macro pressure have suppressed the altcoin, ETH has a ‘deeper problem’, according to Nansen.
It remains to be seen whether Bitmine’s new capital plans will increase buying pressure for ETH and minimize its dump.
Final Summary
- Bitmine plans to launch a STRC-like preferred stock with 9.5% annual interest for additional ETH buys and other purposes.
- While analysts believe Bitmine’s bet might work better than Strategy’s, they questioned the timing amid negative sentiment on STRC.
