On October 8, 2025, the investment firm Kerrisdale Capital announced a short position in Bitmine Immersion Technologies (BMNR), launching a strong critique of the Ethereum treasury company’s business model and sending a warning to its investors.
The Core of the Criticism
Kerrisdale’s central argument is that Bitmine is chasing an outdated and unsustainable strategy. The firm likens Bitmine’s model to a “reflexive loop”, where the company issues new shares at a premium to its net asset value (NAV) and uses the proceeds to buy more Ethereum (ETH). This cycle aims to increase the ETH holdings per share, theoretically boosting the stock price to allow for further share issuance.
However, Kerrisdale asserts this model is breaking down. They report that Bitmine has raised over $10 billion in just three months, issuing around $170 million in new stock every day, which has led to investor “fatigue”. The critical issue is that the growth in ETH per share has slowed dramatically even as the total ETH pile grows, because the number of shares is increasing so rapidly. Bitmine’s premium to NAV has consequently shrunk from 2.0x in August to about 1.2x by October.
Structural Risks and Rising Competition
The report highlights several structural risks that threaten Bitmine’s future. Kerrisdale points out that the market landscape has changed, offering investors better alternatives. The upcoming wave of Ethereum ETFs is expected to provide lower-cost, more transparent, and regulated exposure to Ether, making a premium-priced intermediary like Bitmine less appealing.
Furthermore, Kerrisdale questions the leadership appeal of Bitmine’s Executive Chairman, Tom Lee. While acknowledging his name recognition, the report argues he lacks the “cult-like following” of a figure like MicroStrategy’s Michael Saylor, which is seen as crucial for maintaining the investor enthusiasm needed to sustain the stock premium.
The competitive pressure is also intensifying. The report notes that over 150 other U.S.-listed firms are reportedly planning to raise a combined $100 billion for similar crypto treasury strategies, which could drown out Bitmine’s efforts and further erode its competitive edge.
The Immediate Fallout and What to Watch
Following the release of the short report, Bitmine’s stock (BMNR) fell by 2%. For shareholders and compliance officers, the key takeaway is Kerrisdale’s advice: if you want exposure to Ethereum, it is more efficient to “buy it directly,” stake it, or wait for ETH ETFs rather than pay a market premium through Bitmine’s complex vehicle.
The situation now creates a clear point of contention. The market will be watching Bitmine’s next financial disclosures closely. Key metrics to monitor are the updated ETH-per-share figure, the pace of new share issuance, and the clarity of the company’s treasury reporting. These will determine whether Bitmine can prove its model is sustainable or if Kerrisdale’s critical assessment will prevail.
