Tom Lee is almost about to buy up 5%! of(MISSING) ETH — what comes next?

Written by KarenZ, Foresight News

What on earth gives ETH its long-term value?

On November 8, Ethereum co-founder Vitalik Buterin posted on X, arguing that instead of focusing on the transaction fee burning mechanism, more attention should be paid to ETH's attributes as a store-of-value asset. He believes that the long-term value foundation of ETH should be built more on Ethereum's features such as decentralization, censorship resistance, and security.

Right as Vitalik was discussing the value logic of ETH, two Ethereum treasury companies released their latest earnings reports one after another.

On November 10, BitMine disclosed a net loss of approximately $6.3 billion in fiscal year 2026, but its ETH holdings continued to expand, with the latest holdings exceeding 6.07 million ETH, just one step away from its goal of holding 5%! of(MISSING) the total supply of ETH.

On the previous day, SharpLink announced a net profit of approximately $750 million for the third quarter, of which about $677 million came from unrealized gains on digital assets, and staking business revenue was approximately $13 million.

Although the two companies' profit and loss performance cannot be directly compared due to different reporting periods, both earnings reports reveal common characteristics of ETH treasury companies: accumulating ETH through capital market financing, generating revenue through staking, while book profits are highly affected by ETH price volatility.

Vitalik is discussing the value foundation of ETH itself, but for publicly listed companies like BitMine and SharpLink, another question needs to be answered: how much additional value can they create for shareholders besides holding ETH and waiting for its appreciation?

BitMine: $6.3 Billion Loss in Fiscal Year 2026, ETH Holdings Approaching the "5%! Ta(MISSING)rget"

BitMine's latest earnings report looks more like a report card of asset price volatility.

According to the fiscal year 2026 10-K annual report submitted on November 10, for the fiscal year ending August 31, BitMine achieved full-year revenue of approximately $125 million, a sharp increase from the $6.095 million in the previous fiscal year, but the net loss reached $6.313 billion, compared to a net profit of approximately $349 million in the prior fiscal year.

It should be noted that the fiscal year 2026 disclosed by BitMine is not a calendar year, but the period from September 1, 2025 to August 31, 2026. The company previously adopted a reporting method with the fiscal year ending on August 31 each year, but has decided to switch to the calendar year starting from 2027, with the period from September to December 2026 serving as the transition reporting period. Therefore, the disclosed $6.3 billion loss does not include financial performance since September this year, and cannot be directly compared with SharpLink's Q3 profit.

The main reason for the huge loss is the change in the fair value of digital assets.

In fiscal year 2026, BitMine recognized approximately $6.229 billion in unrealized losses on digital assets. According to applicable U.S. GAAP, qualifying crypto assets such as ETH are measured at fair value, and price changes are directly reflected in the income statement.

As of August 31, BitMine held 5,901,837 ETH, with a total book cost of approximately $19.948 billion and a period-end fair value of approximately $14.559 billion. Calculated based on holdings, the average cost is approximately $3,380 per ETH, while the corresponding period-end price is approximately $2,467. The difference between the two is approximately $5.389 billion, which is the gap between the cumulative cost of period-end holdings and their fair value.

The loss did not stop BitMine from continuing to accumulate ETH.

According to the latest holdings announcement released by the company on November 9, as of November 8, BitMine's ETH holdings have further increased to 6,070,092, accounting for 4.97%!. (MISSING) of the total based on the company's adopted ETH supply of approximately 122.2 million.

This means that the goal of the "Alchemy of 5%!" (MISSING) proposed by Tom Lee is nearing completion. The company stated that after approximately 15 months of accumulation, its holdings have reached about 99%!. (MISSING) of the target size.

At the same time, BitMine also holds 216 BTC, approximately $475 million in cash and marketable securities, as well as equity investments in companies such as Beast Industries and Eightco. Calculated based on the asset prices adopted in the company's announcement, the total value of various crypto assets, cash, marketable securities and related investments is approximately $14.3 billion.

But with such a huge amount of ETH in holdings, how will the company generate revenue going forward?

BitMine's answer is staking.

As of November 8, the company has staked approximately 5.227 million ETH, accounting for about 86%!. (MISSING) of its total ETH holdings. Estimated based on the company-disclosed 7-day average staking yield of 2.65%! (MISSING) and the then-current ETH price, the annualized reward value corresponding to this portion of staked assets is approximately $309 million.

It should be noted that this is only an annualized calculation based on data at the time, not an already realized annual revenue.

BitMine has also extended its business to validator node infrastructure by acquiring Pier Two, a blockchain infrastructure company and staking service provider, and building the MAVAN staking platform, hoping to not only earn staking rewards for its own assets in the future, but also provide related services to other institutions.

In fiscal year 2026, the company's staking and validation business revenue was approximately $121.4 million, accounting for 97%!. (MISSING) of total revenue. At the same time, general and administrative expenses reached $377 million.

This shows that BitMine has established a staking-centric revenue stream, but its current operating scale is still insufficient to cover overall costs.

More notably, as the "5%! Ta(MISSING)rget" is gradually achieved, the narrative of simply expanding holdings will also face new tests: how will the company make such a huge ETH reserve bring continuously growing per-share value to shareholders in the future?

SharpLink: $750 Million Q3 Net Profit, But How Much Is Actually Realized?

Compared to BitMine's huge holdings scale, SharpLink has chosen another route: it not only holds ETH, but also strives to improve the yield generation capacity of these assets as much as possible.

According to the third-quarter earnings report released on November 9, SharpLink achieved Q3 revenue of approximately $13.456 million, a year-on-year increase of 24%!; (MISSING) net profit reached $751.4 million, with diluted earnings per share of $3.45.

However, a breakdown of the earnings report shows that its profit mainly comes from changes in the price and valuation of crypto assets.

In the third quarter, SharpLink recognized approximately $676.7 million in unrealized gains on digital assets, as well as approximately $75.22 million in realized net gains. The two total approximately $752 million, even slightly higher than the net profit for the quarter.

Of this, unrealized gains account for about 90%!. (MISSING) of net profit. These gains do not mean that the company has sold ETH and converted profits into cash.

It is worth noting that realized gains also do not mean that the company has obtained the same amount of cash by selling ETH. According to SharpLink's earnings report, its approximately $75.22 million in realized net gains in Q3 mainly comes from transactions such as the redemption of liquid staking tokens, the conversion between ETH and staking tokens, and the injection of assets into the on-chain yield fund, with part of the gains being accounting profits recognized during the asset conversion process.

If we take a longer time frame, SharpLink's financial performance tells a different story.

Although the company made a profit of over $750 million in Q3, the cumulative net loss for the first three quarters of this year is still approximately $328.4 million. The losses caused by the previous decline in crypto asset prices have not yet been fully offset by the Q3 profit.

Compared to book profits, SharpLink's operating revenue scale is much smaller.

In the third quarter, the company's staking revenue was approximately $13.06 million, a year-on-year increase of 27%!, (MISSING) accounting for about 97%!. (MISSING) of total revenue. During the same period, selling, general and administrative expenses were approximately $11.01 million.

As of September 30, SharpLink held approximately 892,700 ETH and equivalent staked assets, with a corresponding crypto asset book value of approximately $2.1 billion. As of November 2, its holdings further increased to approximately 895,100.

SharpLink has also begun to try more complex asset management strategies.

In the third quarter, the company completed the staking allocation of $200 million worth of ETH on Lido, holding the corresponding liquid staking asset wstETH. Compared with traditional native staking, liquid staking allows ETH to maintain a certain degree of liquidity in the form of tokens while participating in staking.

In addition, SharpLink has also partnered with Galaxy Digital to launch the Galaxy SharpLink Onchain Yield Fund, with an initial committed capital size of $125 million, of which SharpLink has committed $100 million and Galaxy Digital has committed $25 million. The fund began deploying capital in the third quarter.

Joseph Chalom, CEO of SharpLink, stated in the earnings report that the company hopes to manage ETH as an asset that can generate revenue, rather than just passively holding it and waiting for price increases.

This reflects the difference in the strategic focus of the two companies: BitMine is building a scale advantage by expanding holdings and constructing the MAVAN platform, while SharpLink places more emphasis on improving the utilization efficiency of existing ETH.

But active management does not come for free. Liquid staking and other on-chain strategies may bring additional smart contract, liquidity and fund management risks. Whether the final returns can cover these risks and costs requires longer observation.

Share Issuance, Token Purchase, Share Buyback: The Capital Games More Important Than Profit

If you only focus on the profit figures in the earnings reports, you may not have truly understood the business model of ETH treasury companies.

For this type of company, whether it can continuously obtain funds from the capital market and how it uses these funds often directly determines its asset expansion speed.

BitMine is a typical representative.

In fiscal year 2026, BitMine sold a cumulative total of approximately 395.1 million common shares through its ATM (At-the-Market) program, raising a total of approximately $13.2 billion, with net proceeds of approximately $12.941 billion after deducting issuance expenses.

These funds have become an important source for its continuous purchase of ETH.

Its business model thus forms a loop: using stock financing to purchase ETH, expanding asset reserves, and then striving to improve shareholder returns through staking and capital operations.

However, share issuance also means that the ownership stake of existing shareholders may be diluted.

As of the end of August 2026, the number of outstanding common shares of BitMine was approximately 613 million, compared to only about 232 million at the end of the previous fiscal year.

Therefore, to judge whether this type of company truly creates shareholder value, we cannot only look at how much the total ETH holdings have increased, but also pay attention to the amount of ETH per share and the net asset value per share.

Suppose a company originally holds 1 million ETH, corresponding to 100 million common shares, with 0.01 ETH per share. If after share issuance, the holdings increase to 1.5 million, but the number of shares increases to 200 million, then the ETH corresponding to each share will instead drop to 0.0075.

Interestingly, BitMine is also buying back shares while conducting large-scale share issuance.

In fiscal year 2026, BitMine repurchased approximately 20.82 million common shares, with a cumulative expenditure of approximately $354 million. As of the end of August, the remaining quota of its share repurchase authorization was approximately $3.6 billion.

Share issuance and repurchase seem contradictory, but in reality, they depend on the pricing of the stock relative to net asset value.

From a financial logic perspective, when the issuance price is higher than the appropriately adjusted net asset value per share, and the premium is sufficient to cover expenses, share issuance may increase the net asset value per share corresponding to existing shareholders; when the stock price is lower than this value, repurchasing and canceling shares at an appropriate price may also increase the asset value corresponding to the remaining shares.

At the same time, BitMine has also begun to explore financing methods other than common stock.

In June 2026, the company issued 3.5 million Series A redeemable preferred shares at an issue price of $80 per share, raising a total of $280 million. These preferred shares have a par value of $100 per share and a cumulative annual dividend rate of 9.5%!. (MISSING)

This means that BitMine has obtained a new financing channel, while also needing to bear corresponding dividend obligations. According to the annual report, the current issuance scale corresponds to an annual dividend requirement of approximately $33.3 million.

It is worth noting that the yield generated by the company's staked ETH is not necessarily higher than the preferred stock financing cost. Although the two cannot be directly compared as interest rate spreads under the same caliber, this reminds investors that expanding ETH holdings through financing may not be able to cover the cost of capital solely with staking revenue.

SharpLink also attaches great importance to this issue, and regards ETH holdings per share as an important indicator to measure its treasury strategy.

As ETH treasury companies expand in scale, the market needs to pay attention not only to "who bought more ETH", but also to "who can obtain financing under more favorable conditions, and who can grow the asset value corresponding to each share".

What Will These Two Treasury Companies Ultimately Rely on to Generate Profit?

The two latest earnings reports from BitMine and SharpLink actually reveal three potential value sources for ETH treasury companies.

First is the price appreciation of ETH itself. This is the most direct and also the most uncertain part. Due to holding a large amount of ETH, their net asset value and reported profit are highly affected by market price volatility. Rising ETH prices may bring huge book gains, while falling prices may quickly erode asset value.

Second is staking revenue. Unlike simply holding ETH, treasury companies can continuously obtain staking rewards denominated in ETH by participating in Ethereum network validation. However, staking yields are not fixed, and ETH-denominated rewards are not equivalent to stable USD profits. ETH price, validator node operating costs and related risks will all affect the final return.

Third is capital allocation and asset management capabilities. Through strategies such as share issuance, repurchase, staking and other asset management strategies, companies have the opportunity to improve the asset value and return level per share. However, financing is not cost-free: share issuance may dilute the equity of existing shareholders, and more complex on-chain yield strategies may also introduce additional risks.

At the same time, these revenues also need to cover the company's daily operation, personnel, technology, financing and other management costs.

Ultimately, the test for these two companies falls on the same question: besides bearing ETH price risks, can they continuously create additional value for each share through operation and capital allocation?