Disclosure: BitMine Immersion Technologies (NYSE: BMNR), chaired by Tom Lee, is the world's largest Ethereum holding institution, holding approximately 5.8476 million ETH as of August 23, accounting for approximately 4.8% of the company's total supply. Lee himself is also a personal investor in BitMine, manages the GRNY ETF through Fundstrat Capital, and has a core business model at Fundstrat based on paid research subscriptions. Lee's personal wealth is highly linked to the price of ETH, BMNR stock price, and GRNY performance, and all views on Ethereum and the crypto market in this issue are aligned with his significant financial interests. Readers are advised to take these relationships into account in their judgment.

Key Points Summary

· BitMine has increased its ETH holdings from 0 to approximately 5.82 million ETH in 14 months, equivalent to nearly 4.9% of the total supply, with only about a 3% gap from the 5% target.

· All achieved through equity financing, with no debt, no convertible bonds; Lee refers to this as "maintaining a clean capital structure."

· ETH has been purchased every week for over 60 weeks, with a recent shift in the past 5 weeks to a "ETH purchase + stock buyback" combination, adjusting dynamically based on capital returns.

· It is highly likely that BitMine will not stop at 5%, assuming institutions begin to view ETH as a long-term asset; the real assessment point is 2027.

· BitMine does not rely on selling ETH to cover expenses, with an annualized staking yield of approximately $300 million, enough to cover annual dividends of about $30 to $35 million for the 9.5% preferred stock (BMNP).

· Lee likens ETH to "equities/real estate," with its core attribute being a store of value rather than a bond-like cash flow asset.

· He provides a price target: in the next bull market cycle, ETH should surpass $5,000; and with the addition of Wall Street tokenization and AI demand, it should "easily" exceed $10,000 within 1 to 2 years.

Key Insights Summary

· "ETH is a yield-bearing asset. BitMine has no need to sell any ETH due to financial pressure." Tom Lee on whether BitMine will sell ETH

· "If you treat the stock market as a cash flow machine, the S&P 500 has increased about 10 times in the past 15 years, with dividends contributing only 30%, the remaining 9.7 times unrelated to cash flow. The stock market is essentially a store of value." Tom Lee on whether ETH is a store of value or a cash flow asset

· Lee likens BMNP to a three-year Ethereum at-the-money call option: the company pays a 9.5% dividend each year in exchange for the right to lock in more ETH at the current price; if you were to buy a similar call option in the market, the option premium could be close to 100%. Tom Lee explaining the rationale behind issuing 9.5% perpetual preferred shares

· "As AI advances, encryption becomes more important. Encryption is the downstream story of AI." Tom Lee on the relationship between AI and encryption

Part I: Surging to Nearly 5% in 14 Months: What Did BitMine Get Right

On June 30, 2025, BitMine announced its transformation into an Ethereum treasury company with the goal of acquiring 5% of the ETH supply. At that time, the two Bankless hosts privately thought that "5% was impossible to buy." Fourteen months later, BitMine's holdings had reached approximately 5.82 million ETH, close to 4.9% based on the total supply of 1.207 billion. Host David Hoffman stated at the beginning of the show that in the Digital Asset Treasury (DAT) space, this is one of the few cases that "not only did not enter the graveyard but also exceeded expectations."

Tom Lee attributed the success to three key factors.

First, the messaging was consistently simple. He informed investors that the capital structure had to remain clean: all equity financing, no debt, no convertible bonds. Second, positioning the ETH purchases as "aiding the Ethereum ecosystem," with the 5% target needing to be significant without becoming a force of overcentralization. Third, respecting the intelligence of investors, not spinning stories to push the stock price up every week but emphasizing a multi-year time frame. Lee quoted Michael Saylor, saying that evaluating such a company should be done with a four-year perspective, not weekly fluctuations.

Moreso, almost every financing round BitMine completed was above net asset value (NAV, i.e., the corresponding holding value per share), and the ETH per share held grew by over 10 times from the initial trading level of around $450. This meant that early shareholders' ETH exposure per share was significantly amplified, and it was a core reason the stock price could hold above $450.

II. 60+ Weeks of Continuous Buying: Where Does the Money Come From

More astonishing than the holding size is the buying discipline. Since its transformation, BitMine has been buying ETH every week for over 60 weeks. During the same period, Strategy (MSTR) has suspended Bitcoin purchases multiple times and has even sold Bitcoin. Lee explained that their ability to continue buying is key to "doing only the highest-return activity each week."

Over the past 5 weeks, BitMine's cash usage has evolved into a "ETH purchase + stock buyback" combination. Lee stated that as ETH may experience a major rally by the end of the year, the company will become more tactical: they will continue to accumulate ETH while also conducting stock buybacks because buybacks can increase the concentration of ETH per share.

There are three main sources of funds:

· Issuance of Common Stock Above Net Asset Value (NAV): This is the primary cash source, but it is used conservatively.

· Discounted ETH Purchases: Lee revealed that over the past 14 months, most of the ETH was not bought at spot prices but was obtained at a discount through structural arrangements, which added value for shareholders.

· Perpetual Preferred Stock BMNP: Issued in June, with a 9.5% dividend, oversubscribed by over five times, issued at $80, trading around $91 at the time of the program. Lee likened it to "buying a three-year ETH call option at par with a 9.5% annual interest rate," while a similar option in the market might cost close to 100%.

The staking rewards themselves are also compounding. BitMine currently has staked over 5 million ETH through the Maven self-nourishing staking platform and partner staking. Calculated at an annualized staking reward rate of about 2.6% to 2.7%, this results in an annual addition of approximately 120,000 ETH. Lee did the math: they are about 200,000 ETH away from 5%, but with staking producing about 120,000 ETH automatically each year, they only need to purchase an additional 80,000 ETH to reach the target.

III. What to Do After Reaching 5%: Three Possibilities, but Selling ETH is not a Primary Option

The most pressing question in the market: once BitMine reaches 5%, will this giant ETH purchasing machine stop?

Lee presented two potential directions. First, 5% is not necessarily a hard cap. If companies in the future start holding ETH as a long-term asset, it would be "completely reasonable" for BitMine to continue buying above 5%, but this issue will need to be reassessed in 2027. Second, even if they only stop at 5%, staking rewards will continue to drive natural growth in the holdings; at that time, BitMine might choose to sell the rewards to control the overall percentage but will not sell coins due to financial pressure.

He reiterated that BitMine does not need to sell ETH. The annualized staking revenue is about $300 million, while the 9.5% preferred shares carry an annual dividend burden of approximately $30 million to $35 million, with a high coverage multiple. The company doesn't even convert these staking rewards into dollars or stablecoins. Rather than selling the coins, Lee would prefer to "find a way to monetize the ETH assets," such as putting the currently unstaked approximately 800,000 ETH into scenarios useful for the ecosystem.

This also leads to BitMine's second transformation: from a treasury company that solely buys ETH to an Ethereum ecosystem company. The Maven staking platform not only manages BitMine's own ETH but has also attracted over $2 billion in external client assets. Lee referred to it as a "real cash flow business" incubated internally at BitMine.

IV. Funding EF Split Entities: BitMine's Ecosystem Role

Over the past year, the Ethereum Foundation (EF) has been consolidating its efforts and delegating some work to three new entities: the non-profit EthLabs, the for-profit EthSystems, and EthInstitutional. BitMine is a major contributor to these three seed rounds.

Lee explained that Ethereum has grown too large to be overseen by a single organization, similar to how the semiconductor industry doesn't rely on just one trade association. As permanent capital (no maturing debt, no redemption pressure), BitMine can provide a 3-year or even longer runway, allowing these split entities to focus on execution without having to worry about financing every month. This is both a public good investment and a business consideration: BitMine hopes Ethereum can capture as many future opportunities from tokenization and AI as possible.

V. What Kind of Asset is ETH?

David Hoffman asked Lee on the show: Is ETH a cash-flow asset or a store of value? Lee chose the latter but reframed it.

He believes that simplifying the stock market as a cash-flow asset is wrong. Taking the S&P 500 from 2009 to now as an example, the total return has increased by about 10 times, with dividends contributing only 30%, while the remaining 9.7 times come from capital appreciation. Investors buy stocks fundamentally believing that companies can allocate capital better than they can themselves; true pure cash-flow assets are bonds. ETH is more like the stock market, and also like real estate: real estate can be leased to generate cash flow, but long-term appreciation is the core of its cycle.

He also responded to the question of whether institutions would tokenize on Ethereum without the need to hold a significant amount of ETH. Lee believes this view is a common rhetoric in a bear market, and once the price of ETH enters a new uptrend, this argument will quickly disappear. He also used the US dollar as an analogy: the dollar itself cannot be redeemed for gold by the government, but it still serves as the global medium of exchange. Attempting to explain asset prices with a single economic model often leads to absurd conclusions.

Six, Drawing Inspiration from Saylor and BMNP's "Call Option" Logic

BitMine is often compared to Michael Saylor's Strategy. Lee's observation is that while Strategy has been quite successful as a common stock narrative, Saylor's later strategy became more complex, incorporating digital credit, volatility monetization, and other leveraged structures. Lee believes that these innovations need a longer time horizon for evaluation, stating, "It may only be clear from now until 2032."

BitMine chose a different path to capitalize: locking in a dollar cost with 9.5% perpetual preferred stock, while retaining the upside potential of common stock. Lee calculated that if ETH rises to $5,000 or $10,000, the staking returns would far exceed the preferred stock dividend, providing significant leverage to common stockholders. He also implied that if BitMine decides to acquire far more than 5% of ETH, it could expand the BMNP scale; otherwise, the current level of preferred stock issuance is sufficient.

Seven, Cycles, AI, and ETH Price Targets

Lee believes that the crypto market has already bottomed out. He said that from a timing perspective, it is about 95% complete, and from a price perspective, it is about 90% complete. "Unless you're a genius, buying here is likely cheaper than waiting to buy after confirmation of the bottom."

He also agrees with David's statement that "AI will absorb all crypto funds," but added a key insight: crypto is a downstream story of AI. The more mature AI becomes, the greater the demand for machine-to-machine trading, on-chain settlement, and tokenized assets, which in turn will enhance the importance of crypto. This year's AI trend has made it difficult for other assets to gain attention, but this landscape is changing.

As for price targets, Lee provided direct numbers:

· Solely due to entering a new cycle of the crypto bull market, ETH should be above $5,000.

· If Wall Street tokenization and AI-driven demand are combined, ETH should "easily" surpass $10,000 within 1 to 2 years.

He also made a rough calculation of shareholder returns: if ETH flips Bitcoin, with ETH price around $15,000, BitMine's stock price could increase another 10x from the current level to about $180.

8. Conclusion

BitMine has demonstrated over 14 months that the Ethereum treasury strategy can be scaled without debt. For the average investor, the value of this episode lies not in "how BitMine does it," but in Lee providing a framework for evaluating ETH: whether it is a store of value, if staking rewards can cover the cost of capital, and whether institutional hodler demand will truly materialize by 2027.

It is also important to remember that Lee is one of the most obvious stakeholders in this game. His company holds nearly 5% of ETH, and he himself is deeply invested in its success. The $10,000 ETH scenario he paints sounds enticing, but whether this path will materialize still depends on the macro cycle, regulatory progress, and whether Ethereum can truly translate the narratives of tokenization and AI into on-chain demand.

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