BitMine buys back $350 million of stock it says trades below its ether holdings

At roughly $350 million for 21 million shares, BitMine paid an average of about $16.67 a share ^[14]. Management's case depends on that price being below the ether behind each share ^[4]. Crypto Briefing's account does not include a share count or a per-share asset value, so the size of the discount cannot be worked out from it.

Lee calls it the largest buyback ever executed by a crypto stock ^[18]. His performance comparison is more useful. A stock that falls 3% while its underlying asset falls 10% ^[17] has gained about 8% against that asset (0.97 divided by 0.90) ^[20]. Crypto Briefing says this kind of stock usually amplifies the underlying's moves in both directions ^[19]. Some of that 8% is mechanical, or rather it should be: retiring shares and buying ETH every week both raise the ether behind each remaining share ^[6]. The rest is probably the company's own bid while it lasted.

The preferred terms are easier to check. BMNP, a 9.5% Series A perpetual preferred, trades about 24% above its $80 issue price and yields 9.56% ^{[9] [10]}. The two figures only fit together if the coupon is paid on a base near $100. A price of about $99 at a 9.56% yield works out to roughly $9.50 a year per share, close to 12% of what buyers paid at issue ^[15]. So BitMine is retiring common stock it calls cheap while paying that rate on perpetual capital.

Three outcomes fit the record. If the discount stays wide, management keeps drawing on an authorization of which this program used less than 9% ^[16]. A narrower discount would send cash back to the weekly ether purchases and leave this buyback as a one-off. The third possibility is that BMNR goes back to amplifying ETH's moves now that buying ended on August 17 ^[2]. In that case the 3%-versus-10% gap was mostly the company's own demand.

We think the second is the likeliest. BitMine's staking income comes from ETH it holds and locks up ^[7], and, as Crypto Briefing puts it, every dollar spent on buybacks is a dollar not spent on more ETH ^[11]. BitMine is one company, and these figures describe only its choice. We would be wrong if it announces fresh repurchases the next time ETH falls.