Typically, if investors can double their money in five years, that's considered a win for a stock. After all, the broader benchmark S&P 500 index is up about 93% during the past five years (as of July 14), and the S&P 500 has spent most of these years in a bull market.
But occasionally, there are stocks that can go on even bigger runs, especially in the modern era where retail investors have a much bigger presence than they once did, and meme stocks seem to appear annually. Recently, a small-cap crypto stock just generated 10-fold gains in a single month.
Banking on Ethereum and a big name on Wall Street
Bitmine Immersion Technologies (BMNR 1.22%) went public in 2020. The company's core business is in Bitcoin mining and up until recently, Bitmine was a micro-cap stock. In May, the company actually had to conduct a 1-for-20 stock split to lift its share price and meet requirements in its application to list on the NYSE American exchange, which is primarily for micro-cap and small-cap stocks.
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In Bitmine's first quarter of its fiscal year 2025, which ended on Nov. 30, 2024, the company reported revenue of $1.2 billion, which can partly be attributed to higher sales of mining equipment in the quarter. Bitmine also reported a loss in the quarter of about $975 million on an adjusted basis.
But it wasn't the operating results that made the stock lift off. Bitmine recently announced a $250 million private placement to launch an Ethereum treasury strategy, which involves raising capital it plans to use to buy the world's second-largest cryptocurrency by market value. The treasury strategy is following in the steps of the original Bitcoin treasury company Strategy, which was founded by Michael Saylor. The financing comes from a well-regarded group of crypto investors including the Founders Fund, Pantera, FalconX, Republic Digital, Kraken, Galaxy Digital, DCG, Diametric Capital, and Occam Crest Management.
The round also included an investment from the renowned Wall Street market strategist Tom Lee, the lead market strategist at Fundstrat Global Advisers. Lee was also named board chairman of Bitmine. Bitmine's stock has absolutely soared since these announcements and rose as much as 2,700% before crashing. Still, as of July 14, the stock was still up more than 1,000% in the past month.
NYSEMKT: BMNR
Key Data Points
In an interview on CNBC, Lee said he is extremely bullish on Ethereum because it's the network that sits under most stablecoins, which are digital assets pegged to a currency or commodity. Due to their ability to transfer funds to anyone in the world with internet access, and with lower fees than traditional payment methods, stablecoins have grown in popularity. Many analysts say they could become a major source of international payment transfers in the future. In fact, U.S. Treasury Secretary Scott Bessent has said he could see the stablecoin market rising from about $200 billion now to $2 trillion.
Should you buy Bitmine Immersion Technologies?
These crypto treasury companies are always tricky to value because cryptocurrencies themselves are difficult to value. Using various forms of debt to purchase cryptocurrencies also makes these companies a leveraged play.
As of this writing, Bitmine trades at about 1.25 times its planned Ethereum holdings, which is not unreasonable when compared to others like Strategy, which trades at 1.69 times its Bitcoin holdings. Bitmine also appears to also be adopting a Bitcoin treasury strategy, holding about $16.3 million worth of Bitcoin. It also generates revenue from its Bitcoin mining operations, which could swing profitable at some point.
Investors should understand that the stock has been extremely volatile, which seems to be the norm for crypto treasury companies. Bitmine appears to have a very small public share float, which also could be adding fuel to the fire. Either way, I tend to avoid these crypto treasury plays, which I find even more volatile and riskier than the cryptocurrencies themselves. If you like Bitcoin and Ethereum, I'd simply buy those cryptocurrencies instead.
