Tom Lee’s BitMine (BMNR) and Michael Saylor’s Strategy (MSTR) have become the biggest Digital Asset Treasury (DAT) companies in Wall Street. Their stocks have plunged sharply from their all-time highs as Ethereum and Bitcoin prices have plunged in the past few months. This article explores why BMNR is a better investment by far.
BMNR is a better stock than MSTR because of its accumulation strategy
BitMine and Strategy have different cryptocurrency accumulation strategies. Michael Saylor’s Strategy has an open-minded accumulation strategy, with Michael Saylor pledging to buy Bitcoin each month.
The company now owns 765,970 coins worth over $55 billion. It has access to billions of dollars through its ATM, meaning that it will continue the buying spree in the long term.
BitMine, on the other hand, aims to accumulate 5% of Ethereum in circulation. It has now bought 4.8 million ETH tokens, which are equivalent to 3.9% of the total supply. This means that it will hit its target later this year.
Ton Lee believes in the alchemy of 5%, which makes it a big player in Ethereum, but not the most dominant one.
In this case, BitMine will likely stop raising money once it hits the 5% target. In Strategy’s case, shareholders are guaranteed to be diluted as the company has an open-ended approach to its accumulation strategy.
BitMine is generating income from its Ethereum investments
The other major reason why BitMine is much better than MicroStrategy is that it leverages Ethereum’s staking characteristic to generate income, while the latter does well when Bitcoin is rising.
Data shows that BitMine owns Ethereum tokens worth over $10.5 billion. Assuming that it has completed buying 6 million tokens, its assets would be worth over $13.1 billion. If it staked that amount and earns a 3% annual return, it would make nearly $400 million in high-margin revenue. Strategy would not earn anything from its Bitcoin holdings in this situation.
BitMine has many potential uses of these funds. It can use them to repurchase its stock, a common way for companies to return funds to investors. In a statement on Thursday, the company made a commitment to increase its share repurchase program to $4 billion, a 300% surge from the current $1 billion.
As such, the two companies are moving in the opposite directions. Whereas BitMine aims to reduce its outstanding shares over time, Strategy’s Bitcoin accumulation process means that it will consistently raise capital.
BitMine has a better balance sheet than Strategy
Another key reason why the BMNR stock is a better buy than Strategy is that it has a better balance sheet.
Data shows that the company has no debt and has over $800 million in cash and short-term investments.
Strategy, on the other hand, has over $2.4 billion in cash, which it plans to cover its dividends and debt obligations. It has over $8 billion in debt.
BitMine’s cash balance and the expected staking income will give it a leeway to invest in other companies. Most recently, it invested $200 million in Beast Industries, a company owned by MrBeast, the most popular YouTuber in the world. If all goes well, that investment will be worth much more in the future.
BitMine stock has formed a double-bottom pattern
BMNR stock chart | Source: TradingView
Technicals also suggest that the BMNR stock price may rebound in the near term. It has formed a double-bottom pattern at $17 and a neckline at $23.40. This pattern is often a good sign of a reversal.
The Relative Strength Index has jumped from the oversold level of 24 to the current 52. It is also in the accumulation phase of the Wyckoff Theory, meaning that it may stage a strong parabolic move in the near term. If this happens, it may soar to the 50% Fibonacci Retracement level at $41, up by 92% YoY.
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