BitMine now owns 4 million Ethereum (ETH), making it the world’s largest listed ETH holder. Investors increasingly see the share as a reflection of the Ethereum price. But what does such a gigantic crypto reserve actually mean for the company’s valuation on the stock exchange?
BitMine dominates public ETH holders
According to data from StrategicETHReserve, BitMine currently owns 3.97 million Ethereum. At a price of $2,950, this represents a value of $13.29 billion.
With this asset, BitMine serves as the largest publicly traded ETH reserve company in the world. There are a total of 67 public companies with a combined holding of 6.71 million Ether. So BitMine single-handedly accounts for an impressive portion of that.
As with Strategy and Bitcoin (BTC), investors see BitMine stock as a kind of reflection of Ethereum. It offers a simple and indirect way to invest in ETH, without having to buy crypto yourself.
Valuation per share under pressure
Yet the picture for the BitMine share price is less clear than it seems. It is not only about how much ETH the company owns, but especially about how many tokens it has in return per share. And that number is under pressure.
Despite BitMine owning more Ethereum than ever before, the stock is significantly lower than earlier this year. At the time of writing, the stock is trading at $31.36. In July it reached a peak of over 160 dollars. The price has been on the rise again since November. At the time, the share was still below $24.
In addition to the performance of the Ethereum price itself, dilution is an important point of attention. BitMine has issued new shares in the past and has rights to issue even more shares in the future. As a result, the value per share does not automatically increase, even if the number of ETH on the balance sheet increases.
Why mNAV is essential for investors
For investors, the ratio between ownership and the number of outstanding shares is therefore crucial. An important measure to keep an eye on is the mNAV: the ratio between the market value of the share and the net value of the crypto assets.
According to data from Blockworks, BitMine’s mNAV currently stands at 1.06. This means that the company’s market value is 6 percent higher than the value of the ETH it owns.
During bull markets, this ratio often increases. Investors expect the underlying crypto coins to further increase in value. Public reserve companies then serve as leverage on that price, whereby the share can rise faster than the currency itself.
In August the mNAV was even around 2, which indicates high expectations at the time.
Source: https://newsbit.nl/beleggers-waarschuwen-bitmine-aandeel-niet-meer-in-lijn-met-ethereum-koers/
