Bitmine Reports $6.3 Billion Annual Loss, Nearly All From Ether's Drop

Bitmine Immersion Technologies lost $6.31 billion in the fiscal year that ended Aug. 31, its annual report filed Tuesday evening shows. Of that, $6.23 billion was an unrealized loss on its ether.

A year earlier, the company had net income of $348.6 million, according to the 10-K. The swing tracks the ether price, not the business.

Why a falling token shows up as a loss

Bitmine marks its crypto at fair value, meaning the market price on the reporting date, and books any change straight into profit. "Unrealized" means it didn't sell. If ether falls, the loss appears on the income statement anyway. If it rises, so does reported profit. The filing warns that this will keep causing "significant volatility" in results.

On Aug. 31 the company held 5,901,837 ETH worth $14.56 billion, about 4.9% of circulating supply, plus 211 bitcoin worth $16.6 million.

Staking now pays most of the bills

Revenue rose to $124.8 million from $6.1 million. Staking and validation brought in $121.4 million, or 97% of the total. Staking means locking ether to help run the Ethereum network in exchange for rewards, which Bitmine puts at about 2.5% to 4.0% a year, paid in ETH. When ether falls, those rewards are worth less in dollars.

Follow the money

Shareholders paid for the stack. Bitmine sold 395.1 million new shares through an at-the-market program, which lets a company sell stock gradually into the market, raising $13.2 billion before costs. It also bought back and retired 20.8 million shares for $353.8 million.

The 10-K also says the company is still working to fix material weaknesses in its internal control over financial reporting.

The buying hasn't stopped. As of Nov. 8, Bitmine held 6,070,092 ETH, or 4.97% of supply, its Nov. 9 release said. Chairman Tom Lee has set 5% as the stopping point. Ether traded near $2,059 at 5:55 a.m. ET Wednesday, down 1.4% in 24 hours, per CoinGecko.

In our opinion: the loss is on paper, but the shares sold to fund the buying are real, and 395 million of them now split whatever the ether is worth. The release valued the stack at $2,234 per ETH on Nov. 8; Wednesday's price is about 8% lower. The next markers are the 5% line, roughly 40,000 ETH away, and whether the next filing reports those control weaknesses fixed.