Kerrisdale Capital took a short position at Bitmine Immersion (BMNR), an Ether-focused digital asset financing company led by Fundstrat Thomas Lee, calling its business model a relic of the crypto era that has passed.
In a detailed report published Wednesday, the well-known short seller said Bitmine’s strategy reflects the strategy of Strategy (MSTR) – it issues stocks at a premium to buy crypto and grow stock metrics per share per token, but argued that market conditions no longer support that model.
“BMNR is chasing models heading for extinction,” writes Kerrisdale. “Rareness and meme-like enthusiasm once kept the premium high despite constant dilution, but those conditions have disappeared.”
Kerrisdale shorted out its long strategy in Bitcoin a few months ago, noting that the company’s premium on net asset value is not sustainable. Trade thus far has proven to be extremely beneficial.
Las Vegas-based Bitmine has undergone dramatic pivots over the past year, turning from a niche Bitcoin miner to an etheric-heavy corporate finance ministry. FundStrat co-founder Thomas Lee is executive chairman, and Bitmine has since July 2025 has collected over $10 billion and acquired more than 2.8 million ETH, primarily through stock sales in the market (ATM).
The stock went from about $5 to over $100 at the start of its ether financial strategy before returning to about $58 in its latest deal.
Kerrisdale said the pace of its share issue was around $170 million a day, and “turned early enthusiasm into fatigue.” The report criticizes Bitmine’s latest $365 million stock raise and is being sold as an insurance contract.
The company also targeted Lee himself, saying his presence lacked the gravity pull needed to maintain investor confidence. “Tom Lee brings name recognition as a strategist and television commentator, but he doesn’t order anything like the cult that turned Michael Saylor into a memestock icon,” the report says.
Kerrisdale said it would remain bullish on the ether, but he doesn’t think it would justify paying premiums through intermediaries like Bitmine. “If you need ETH, just buy it directly,” the company wrote.
In addition to pressure, there is a new flood of competition. More than 150 US listed companies are reportedly planning to provide $100 billion in Cryptocurrency Department, and the wave of Ethereum ETF is expected to provide a lower cost and more transparent exposure.
Kerrisdale said Bitmine’s disclosure has become increasingly opaque. Even if Token Holdings rose, the expansion by share has declined sharply in recent months. “The reflective loops that all DATs rely on have begun to stall,” the company wrote, noting that Bitmine’s market premium fell from 2.0 times in August to about 1.2 times in October.
“Strategy is common, competition is mushrooms, disclosure is unclear, stocks here and there are slower,” concluded Kerrisdale. “BMNR premiums are destined to sink.”
Bitmine representatives did not respond to requests for comment. The company’s shares fell 2% on Wednesday.