Author: Cubone Wu Says Blockchain
Reprint: White55, Mars Finance
The US-listed company BitMine Immersion Technologies (BMNR) is trying to replicate the MicroStrategy path—rapidly increasing its Ethereum holdings through equity financing to build its balance sheet into an 'ETH treasury'. After the transformation announcement, the stock price initially surged, then fell sharply, entering a period of range-bound oscillation; later, propelled by the progress of holdings and financing, it surged again, followed by a retracement. At the same time, due to the continuous execution of ATM issuance, the circulating share capital continues to expand, and the market capitalization dynamically adjusts according to the issuance pace. This article focuses on BMNR's internal structure: can this 'exchange shares for coins' reflexive flywheel operate in the long term? When mNAV (EV/ETH, where EV = market capitalization + interest-bearing debt - cash) premiums converge and secondary market capacity weakens, will it switch from 'per-share accretion' to 'net dilution'? The following text organizes its key risks based on public disclosures and on-chain standards.
Core data: ETH reserves, equity, and premium levels
First, let's look at the fundamental data of BMNR. As of mid-August 2025, BMNR held approximately 1.297 million ETH, valued at about $5.77 billion at that time's market price. This scale makes BMNR the third largest cryptocurrency asset reserve company in the world, behind MicroStrategy and MARA. The circulating share capital is approximately 173.5 million shares. In terms of stock price, it rose from a low of $30.30 in August to a high of $71.74 (an increase of about 136.8% during this period), then fell back to a closing price of $57.81 on Friday (up 90.8% from the low, down about 19.4% from the high), corresponding to a market capitalization of about $10.03 billion. According to mNAV = (market capitalization + debt - cash) / ETH holding market value, calculated based on Friday's closing price (market capitalization $10.03 billion, debt about $1.88 million, cash about $1.47 million, ETH holding market value about $5.77 billion), mNAV is approximately 1.74.
The strength at the beginning of August was mainly driven by a series of catalysts: the listing of stock options on July 23 improved accessibility to trading and hedging tools, the board approved a buyback plan of up to $1 billion on July 29, and the disclosure of holdings exceeding 833,137 ETH on August 4, and exceeding 1,150,263 ETH on August 11, led to a continued upward revision of market expectations regarding the 'exchange of shares for coins' rhythm. The subsequent decline was mainly driven by the excessive expansion of premiums (measured by mNAV) leading to a mean reversion to NAV, accelerated by the resonance of rising ATM supply expectations and weakening secondary market capacity, compounded by ETH's pullback.
Structural mechanism: options leverage and mNAV premium flywheel
The company disclosed in mid-July that its holding of approximately 60,000 ETH came from in-the-money options and was backed by approximately $200 million of unencumbered cash at a 1:1 ratio; however, the official disclosure later adjusted to total ETH holdings measured in 'tokens' (as of August 4, it was 833,137 ETH, and as of August 11, it was 1,150,263 ETH), without separately listing the 'including options' item, nor issuing an independent announcement about the completion of option exercises. Based on current information, there is no clear official document announcing that the exercises have been completed. However, considering the changes in disclosure standards, corresponding cash capabilities, and holding rhythm judgments, it is highly likely that these 60,000 ETH have been converted into spot through exercising options or equivalent spot replacement after July 17, and final confirmation will require waiting for the next quarterly report or derivatives notes in the 8-K.
The core of BMNR lies in its mNAV (market net asset value multiple) driven reflexive flywheel mechanism: when the stock price P is higher than the net asset value NAV per share (i.e., mNAV > 1), the company can issue additional financing through the ATM mechanism within the premium range and use the proceeds to purchase ETH, thereby increasing the ETH holdings per share, resulting in an increase in book value (accretion). Theoretically, as long as P > NAV is maintained, each round of financing will push up the asset value per share. However, the essence of this model is a structural equity redistribution: even if a premium exists, if the market questions the logic of 'continuously exchanging assets to achieve accretion', the issuance behavior may be repriced as dilution, thereby suppressing the overall valuation level.
In the positive operational phase of the flywheel, the path is: mNAV rising → ATM financing → increasing ETH (ETH per share rises) → strengthening market narrative and valuation elevation → further financing, forming a positive feedback loop. Conversely, the failure of this mechanism may be triggered by the following factors: mNAV converging to 1 or below 1, a decline in ETH's intrinsic price, weakened secondary market capacity, or rising expectations of ATM issuance supply, etc. Once market expectations switch, the flywheel mechanism will shift from 'accretion' to 'dilution', forming a negative feedback. In this scenario, the company often needs to hedge against dilution effects through buybacks to maintain stability in per-share metrics, but its execution capabilities will be practically constrained by unrestricted cash reserves and the speed of financing receipts.
Therefore, the sustainability of this model depends on three key factors: first, the market's trust in its ETH treasury logic and asset premium pricing basis; second, the continued supportive role of ETH's intrinsic price; third, the company's internal execution synergy efficiency, covering key operational aspects such as ATM contracting and fund receipt pace, the OTC purchasing power of bulk ETH, and the reinvestment mechanism for staking income.
Potential collapse trigger mechanisms: Four major risk alerts
Although BMNR is on the rise, the inherent fragility of its model means that a cascading collapse may occur under extreme conditions. The following four major risk paths are worthy of investor vigilance:
(1) Significant pullback in ETH's intrinsic price
The valuation of companies like BMNR, which are 'ETH treasury-type', is highly anchored to the spot value of ETH they hold. A decline in ETH will simultaneously depress both the net asset value (NAV) per share and the market capitalization multiple (mNAV). If ETH experiences a pullback after additional issuance in the premium range, it may trigger a 'double whammy' of valuation foundation and market narrative, amplifying declines and exacerbating liquidity outflows, leading to a rapid shrinkage in market capitalization.
(2) mNAV premium convergence and financing chain breakage
The flywheel mechanism currently relied upon by BMNR is built on a high mNAV premium base. Once this premium converges or even drops below 1, the space for additional issuance will be blocked, leading to a dilemma of dilution being difficult to sustain. If it fails to timely shift to buybacks or reinvestment of staking income to stabilize the metrics, the market may interpret it as the growth logic being extinguished, triggering a reversal of secondary market sentiment and accelerating price pullbacks.
(3) Liquidity tightening and regulatory uncertainty
As a small to mid-cap stock, BMNR has limited capacity in the primary market, and its financing efficiency highly depends on market sentiment and macro liquidity conditions. In addition, the asset allocation behavior of ETH treasury-type assets is still in a regulatory gray area. If it is defined in the future as 'similar to ETF', 'structured derivative positions', or 'non-operational financial operations', it may face upgraded information disclosure obligations, trading restrictions, or apply to stricter regulatory frameworks, impacting its valuation base and financing channels.
(4) Trust overdraw risk of shell company structure
BMNR and most ETH treasury stocks are small to mid-cap shell companies facing business stagnation or on the verge of delisting, lacking sustainable revenue and profit foundations before strategic transformation, with valuations highly reliant on narrative-driven momentum boosts from additional financing. This structure is highly analogous to the ICO model: packaging a strong narrative, exchanging shares/tokens for ETH, constructing short-term high valuations, but during ETH pullbacks or financing obstacles, will fall into a trust collapse due to lack of business support and valuation anchoring.
Once trust wanes, market preferences reverse, or regulation tightens, companies lacking actual cash flow and sustainable profit models under a shell structure will face extreme risks of instantaneous liquidity depletion and non-linear valuation collapse.
Conclusion: The boundaries of the reflexive flywheel will ultimately be determined by trust.
BMNR's path represents a new type of business narrative that merges capital structure with cryptocurrency assets. Through the mNAV flywheel mechanism, it rapidly amplifies valuations in a bull market, achieving reflexive reinforcement between 'equity - currency-based - market value'; at the same time, it deeply binds the volatility of ETH, market sentiment, and regulatory uncertainty within the company structure.
This structure exhibits high leverage and rapid growth characteristics during upward cycles, while also possessing the potential for accelerated failure during downward cycles. ETH declines, premium reverts, secondary markets cool off, and failed additional issuances—these variables, which would not typically constitute fatal risks, may amplify and ultimately trigger a non-linear collapse due to reflexive mechanisms interacting. More crucially, as a micro-strategy company transformed from a shell structure, its core value does not stem from operational capabilities or on-chain productivity, but from the market's expectations of its 'sustained ETH accumulation and creation of per-share value'. If this expectation cannot be self-evident, or even faces counter-evidence, the foundation of trust may collapse instantly, and the flywheel mechanism will struggle to sustain itself.
Looking back at the collapse after the ICO boom, the market is not lacking in memories of structural faith fractures. The difference this time is that the 'shell' comes from a US-listed company; however, the similarity lies in the fact that, in the absence of intrinsic cash flow and real business support, any mechanism of 'exchanging assets for trust' will inevitably fail the test of time. Whether BMNR can sustain itself in the long term does not depend on how much ETH it can buy, but on whether it can prove itself to be an 'asset manager' with execution capabilities based on 'currency-based' principles, rather than merely relying on valuation narratives to drive its shell-like transmission.
