Concerns attach to the sustainability of crypto-crypto-treasury companies as BlackRock moves forward with a staked ether fund that analysts say could compete directly with existing digital-asset treasures.
Bitmine Immersion Technologies, the world’s largest corporate ether (Eth) holder, is currently down $1,000 per ETH purchased, implying a cumulative unrealized loss of $3.7 billion in its total holdings, according to a Thursday research report From Crypto Insights Company 10X Research.
Declining Net Asset Value (NAV) across these firms makes it difficult to attract new retail investors while leaving many existing shareholders effectively “trapped” unless they sell at a steep loss, 10x Research founder Markus Thielen write in a LinkedIn post.
“When the premium inevitably shrinks to zero, as it does now, investors find themselves trapped in the structure, unable to get out without major damage, a true Hotel California scenario,” he said. He added that, unlike exchange-traded funds (ETFs), digital-asset treasury companies, or DATs, “layer on complex, opaque, and often fund-of-fund-like structures can quietly return.”
Related: BlackRock Leads Near $3B Bitcoin November ETF Exodus With Record $523M Inflow
The MNAV ratio compares the value of a company’s business to the value of its crypto holdings. An MNAV above 1 allows a company to raise funds by issuing new shares to accumulate digital assets. Values below 1 make it harder to expand capital and holdings.
Bitmine’s core MNAV stood at 0.77 while its diluted MNAV stood at 0.92, according to data from Bitminetracker.
Bitmine holds about 3.56 million ETH worth about $10.7 billion, which represents 2.94% of the total ether supply. The company’s average cost base is $4,051 per ETH.
Other DATS too suffered a sharp decline in their MNAVs, including approach, bitmine, Metaplanet, Sharplink GamingUpexi and Defi Development Corp.
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BlackRock steps in with lower cost competition
BlackRock is registered A new staked ether ETF offering in Delaware, marking the first step for the giant’s $13.5 trillion management of Ethereum-based products, Cointelegraph reported earlier on Thursday.
BlackRock’s proposed Ether could offer another low-cost, yield-generating fund, without the hidden costs associated with traditional fund companies. This development could threaten the economics of DATS, according to 10x Research.
“With BlackRock now seeking approval to stake ETH in its ETF, which offers a low-cost source of yield, the economics of DATS will likely face increased scrutiny,” the research report reports.
More investors may start reallocating toward a potential staked ether fund from BlackRock when they realize that the 0.25% management fee pales in comparison to the embedded costs of DATs, according to 10X.
Asset managers Rex-Osprey and Grayscale have already launched ETH ETF products in September and October.
https://www.youtube.com/watch?v=C8Z5LC_IYCQ
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