Bitmine slows ETH purchases and spends about $86 million on buyback

Bitmine slowed its Ethereum buying and put roughly $86 million into repurchasing its own stock, a shift investors may read as management weighing the value of BMNR shares against adding more ETH. The company still sits just below its target of holding 5% of Ethereum’s circulating supply, according to Bitmine.

The Ethereum treasury company added 7,430 ETH last week, worth about $14 million at the reported purchase value. Bitmine said the buy lifted its holdings to about 5.78 million ETH, equal to nearly 4.8% of Ethereum’s circulating supply.

Bitmine, chaired by Fundstrat’s Tom Lee, trades under the ticker BMNR. Its shares were recently at $16.61, up almost 6% on the day, according to the reported market data.

Why the buyback matters

Lee told shareholders the slower pace of ETH purchases reflected Bitmine’s decision to buy back about 5.5 million common shares at an average price of $15.62. That works out to roughly $86 million spent on its own stock.

A stock buyback is when a company uses cash to purchase its shares from the market. For investors, the key idea is capital allocation: every dollar spent on repurchases is a dollar that cannot be used at the same time to buy more ETH, hold more cash, or make another investment.

The repurchases were made under Bitmine’s $4 billion buyback authorization, according to the company. An authorization gives management permission to repurchase shares up to a set amount, although it does not require the company to use the full total.

Lee said Bitmine has bought ETH every week since starting its Ethereum treasury strategy just over a year ago. The latest weekly addition was one of the company’s smallest since the strategy began, according to the reported figures. By comparison, Bitmine bought more than 111,000 ETH during one week in May.

Bitmine’s crypto balance sheet

Bitmine now holds roughly $11 billion worth of Ethereum, making it the world’s largest corporate holder of ETH, according to the company. It is also among the largest digital asset treasury companies, behind Michael Saylor’s Strategy, which holds roughly $54 billion in Bitcoin.

A digital asset treasury company is a public company that makes crypto holdings a central part of its balance sheet. For stockholders, that can make the company’s share price sensitive to both its own corporate actions and moves in the underlying token.

Bitmine also reported holdings of 207 Bitcoin, $385 million in cash and securities, a $180 million stake in Beast Industries, and a $58 million position in Eightco Holdings.

The company said it has staked 4.92 million ETH, or about 85% of its Ethereum holdings, through its MAVAN validator platform. Staking means locking tokens to help operate a proof-of-stake blockchain such as Ethereum in exchange for rewards. Bitmine said that staked ETH is projected to generate annualized revenue of about $247 million.

Ethereum was quoted at $1,898.69 in the reported market data, up 1.52%. Bitcoin was quoted at $65,404, up 1.29%.

This story draws on original reporting from Decrypt.