Tom Lee's Crypto Company Is Imploding

— In June of 2025, a failing Bitcoin mining company called Bitmain Technologies announced that it would wind down its mining operations and turn into an Ethereum treasury company. As a treasury company, its only purpose is to raise capital and acquire Ethereum. In conjunction with its corporate pivot, they hired a man named Tom Lee to be the company's chairman. Tom Lee owns a financial research firm called Fundstrat. In this capacity, he frequently appears as a talking head on CNBC and other financial media outlets. This positions him well to promote Bitmain stock to naive retail investors. Immediately following the Ethereum treasury pivot, Bitmain's share price skyrocketed to more than $100. Since then, it's declined by more than 80%. Part of this could be attributed to the poor performance of Ethereum itself. Since peaking in the summer of 2025, Ethereum has lost more than half its value. As the Ethereum's strategy fails, Tom Lee has been pivoting Bitmain's investment strategy to increasingly bizarre directions. The company recently invested in another crypto treasury company called ApeCoin, and even made an investment into the Mr. Beast YouTube channel. In this video, we'll untangle the story of Bitmain Technologies and highlight the absurdity of crypto treasury companies. But before we get into the video, a quick word from today's sponsor, Monarch Money. Monarch Money is an all-in-one financial dashboard where you can connect over 13,000 institutions and track your full financial life in one place. Before I started using Monarch Money, I would have to look at all of my different credit card, bank, and investment accounts individually, which was almost impossible to keep track of. So, I really had no idea how much I was actually spending. It's a game-changer to have all of your financial information in one beautiful consolidated dashboard. When I first started using Monarch Money, I found out that I was paying for multiple subscription services that I forgot about and never used. Just canceling all of these saved me over $50 per month. If you want to manage your finances responsibly, the first step is understanding how you're spending your money. But, Monarch Money is so much more than just a budgeting tool. You can track all of your accounts, transactions, and investments. You can even add assets like your car or your home where you can see your debt payoff progress. And it does it all without ads, without credit card offers, or any hidden fees or anything like that. It works seamlessly with a beautiful, intuitive experience on both desktop and mobile. Monarch has earned a 4. 9 star rating from thousands of users who found peace of mind seeing the full picture of their finances. If you want to regain control of your financial life, scan the QR code or click the link in the description below to get started today. You can start a free trial and get 50% off your first year by using the code WSM50.

WSM50. Before we start looking at Bitmain in particular, let's set the stage by discussing Ethereum and its recent performance. Ethereum is a cryptocurrency that's capable of supporting so-called smart contracts. Smart contracts allow you to make things like NFTs and stablecoins. When people transact on the Ethereum blockchain, they need to pay so-called gas fees denominated in Ethereum. A portion of these gas fees are burned, which decreases the circulating supply of Ethereum tokens. The bull case for Ethereum is that as people use the Ethereum blockchain more, more gas fees are collected and more tokens are burned. This will result in decreasing supply, which should push the price per token higher. In July of 2025, Trump signed the Genius Act, which provided regulatory clarity for stablecoins. Many crypto bulls hoped that this would cause increased adoption of stablecoins and crypto in general. The price of Ethereum more than doubled during the summer of 2025, mostly due to the bullish sentiment triggered by the Genius Act. However, the expected benefits to Ethereum failed to materialize and the token has given up all of its recent gains. The Genius Act has indeed resulted in increased adoption of stablecoins. Currently, the aggregate market cap of all stablecoins is greater than 300 billion dollars. People are increasingly using stable coins for cross-border money remittances and other use cases. The majority of stable coins operate on top of the Ethereum blockchain, either directly or indirectly. So, why hasn't this translated to increased demand for the Ethereum token? If we look at the gas fees charged by the Ethereum network, they increased substantially in 2021 and 2022. This was at the peak of the crypto bubble, where people were creating huge numbers of NFTs and decentralized exchanges that are built on top of Ethereum. Since gas prices are set by supply and demand for block space, this congestion drove fees to very high levels. By 2023 and 2024, the crypto mania had largely died down and the demand for Ethereum transactions declined substantially. In 2025, Ethereum gas fees collapsed to almost nothing. This is primarily due to the rise of so-called layer-two blockchains, which sit on top of the Ethereum blockchain. They aggregate large numbers of transactions and sell them on the Ethereum blockchain all at once. This drastically decreases the number of transactions processed by the Ethereum blockchain, resulting in far lower gas fees. Also, during this period, Ethereum adopted multiple upgrades, which increased the number of transactions that can be processed on each block. This also puts downward pressure on gas fees. In summary, the rise of layer-two blockchains, as well as changes to the Ethereum protocol, have more than offset the increased demand from stable coins. So, how does this translate to Ethereum's tokenomics? Prior to 2022, Ethereum used a proof-of-work mechanism similar to Bitcoin. People ran mining rigs and received newly minted Ethereum tokens as a reward. The mining rewards far surpassed the tokens that were burned by the gas fees. So, Ethereum's circulating supply increased very rapidly. In 2022, Ethereum switched from proof-of-work to proof-of-stake. Proof-of-stake is a consensus mechanism by which transactions on the Ethereum network are validated not by energy-intensive miners competing to solve math problems, but by validators who lock up or stake their own Ethereum tokens as collateral to earn the right to verify transactions and earn rewards. This approach requires far less computational power and therefore far less compensation to participants, which is why the switch so dramatically reduce the rate at which new ETH is created. From 2022 through 2024, there is a relatively high amount of activity on the Ethereum blockchain, resulting in high gas fees. During this period, gas fees surpass new token issuance to validators, and the circulating supply of Ethereum gradually decreased. Over the past few years, the amount of gas fees collected by the Ethereum network declined substantially and no longer offset the new supply awarded to validators. Thus, Ethereum circulating supply is again increasing. Now that we understand the tokenomics, we can make sense of Ethereum's recent price action. People assume that increasing adoption of stablecoins would cause the circulating supply of Ethereum to decrease, but Ethereum supply is still increasing. This crushes Ethereum's bull case. Over the past few months, Ethereum founder Vitalik Buterin has been dumping tens of millions of dollars of his personal Ethereum holdings, even as the price declines. One could make comparisons to rats and sinking ships.

Today is easier than ever to invest in Ethereum. Even if you don't have an account on a crypto exchange, you can buy Ethereum ETFs. So, what's the purpose of Ethereum treasury companies like Bitwise? Let's listen to Tom Lee trying to explain. We believe the Ethereum treasury companies like Bitwise are superior to holding Ethereum itself because we are increasing the Ethereum held per share. And again, Ethereum ETFs do not do that. And more importantly, Ethereum treasury companies are essentially crypto infrastructure businesses. Let me explain. We can increase your Ethereum held per share because a company can issue stock at a premium to the dollar value held at Ethereum per share. That means you are growing the company's overall holdings of Ethereum. Number two, you can issue convertible bonds and warrants which take advantage of the inherent volatility of not only the stock but the underlying volatility of Ethereum. Uh the operations of Bitmain itself can actually be used to buy more Ethereum. And interestingly, Ethereum generates staking yield and those rewards can be used to buy more Ethereum. And finally, there are other crypto treasury companies out there that hold Ethereum and if they trade at close to net asset value, Bitmain could use its stock to acquire another company. Almost everything that Hong Wei said was either false or highly misleading. Firstly, he says they can issue new shares at a premium to net asset value and use these proceeds to buy Ethereum. It is technically true that this will result in an increasing Ethereum per share. However, this relies on finding investors who are dumb enough to purchase your shares at above net asset value. In recent months, Bitmain's premium to net asset value has collapsed and their Ethereum per share is now declining. We'll discuss this in more detail later. Secondly, he says that they can issue convertible bonds and use the proceeds to purchase Ethereum. Borrowing money to purchase cryptocurrencies is an extremely risky proposition and either way, it's a moot point. Bitmain has been operating its Ethereum treasury strategy for almost a year and to date, they've not issued any convertible bonds. Thirdly, he says that the company can use its income from operations to fund the purchase of more Ethereum. The problem is Bitmain has no real operations to speak of. In the most recent quarter, Bitmain generated $11 million of revenue of which $10 million came from staking its Ethereum stockpile. They generated minuscule amounts of revenue from their legacy Bitcoin mining business which they're in the process of winding down. They also generated a minuscule amount of revenue from consulting and leasing. During the quarter, they incurred $75 million of general and administrative costs, which is far greater than their revenue. The reality is actually the opposite of what Tom Lee wants you to believe. The company incurs tens of millions of dollars of operating losses per quarter, which erodes net asset value. Finally, he says that Bitmain receives taking rewards from its existing Ethereum stockpile. This is true, but it's frankly too small to matter. The staking yield is only about 3% per year. In the most recent quarter, they generated $10 million of staking revenue, but incurred $75 million of general and administrative costs. The minuscule revenue they generate from staking is not even enough to keep the lights on and pay Tom Lee's salary. Finally, he says that Bitmain can acquire other Ethereum treasury companies whose stock prices trade near their net asset value. This is an idiotic idea. When you acquire a public company, you have to pay a premium to its current share price. If the acquisition target trades near net asset value, you will have to acquire it at a premium to net asset value, in which case you'd be better off just buying Ethereum directly.

While Bitmain generated a lot of hype in the beginning, its stock price has been steadily declining over the past year, falling by more than 80% from its highs. Investors are gradually coming to the realization that the entire idea of a crypto treasury company is moronic. In recent months, Tom Lee's attempted to reinvigorate investor interest by making what he calls moonshot investments. Bitmain's first moonshot was announced in September of 2025 when they paid $20 million to purchase 13. 7 million shares of Aiko Holdings. That's a purchase price of $1. 46 per share. Aiko is a publicly traded crypto treasury company whose purpose is to accumulate the Worldcoin cryptocurrency. Worldcoin is a creepy crypto scam created by Sam Altman. They go around the poor countries and pay people with cryptocurrency to scan their eyes. We've made multiple videos about Worldcoin in the past. The Worldcoin cryptocurrency has been a complete failure. It's declined by more than 80% since its ICO and now trades for just 25 cents. Like all crypto treasury companies, Aiko has followed the path of hyper dilution and its share price has declined to almost nothing. In March of 2026, Bitmain doubled down and invested another 80 million dollars into Aiko in exchange for 87 million new shares. This represents a purchase price of 92 cents per share. In total, Bitmain owns approximately 100 million shares of Aiko at a total cost of 100 million dollars or about $1 per share. As of the time of recording this video in late April 2026, Aiko's stock price is 87 cents. So, Bitmain has already suffered more than 10 million dollars of unrealized losses on its investment and now they own approximately 1/3 of Aiko's outstanding shares. If they try to dump their shares, the stock price is likely to tank even further. In January of 2026, Bitmain paid 180 million dollars to purchase 4 million shares of series C preferred stock and 710,000 shares of common stock of Beast Industries. This gives Bitmain a 4% equity interest in Beast Industries and values Beast Industries at 4 and 1/2 billion dollars. Beast Industries is a parent company of the Mr. Beast YouTube channel. The press release says 200 million dollars, but it's actually only 180 million dollars with the option to invest another 20 million dollars at some point in the future. Shortly after Bitmain made its investment in Beast Industries, Tom Lee gave an interview to CNBC where he struggled to explain the strategic rationale. Um and that's where uh a collaboration and investment into Beast Industries makes sense. Um as you know, Mr. Beast is the number one content creator in the world. His content is watched more than for each of his videos 252 million views a month, which is more than the Super Bowl. And really he is probably the iconic person for Gen Z, Gen Alpha, and arguably millennials. So, he is probably one of the most important creators in the world. Uh Beast Industries, according to Jeff Houseenbold, is planning to create a future platform of services, which includes digital items and even financial services. And that's really where a collaboration between Beast Industries and Bitmain will make sense. So, I think it's part of the sort of evolution of digital platforms and money. And I think it's really uniting this now the you know, the number one creator in the world with the biggest Ethereum platform in the world. According to Tom Lee, at some point in the future, Mr. Beast will launch a platform that sells digital items and financial services. Maybe Mr. Beast will launch NFTs, which run on the Ethereum blockchain. I don't know if this is even true, but even if Mr. Beast does want to launch NFTs, there's no way that Bitmain can help them. You don't need to own 5 million Ethereum tokens to sell NFTs. Any creator, brand, or platform can mint and sell NFTs with nothing more than a standard crypto wallet and a marketplace account. Owning a massive Ethereum treasury does not give you better access to the network, lower transaction fees, preferential minting rates, or any other competitive advantage in the NFT space. Bitmain's hoard of Ethereum is completely irrelevant to anything Beast Industries might do. Mr. Beast is one of the most famous people in the world. I believe the main reason Bitmain made this investment is to garner more attention from retail investors and try to convince them to buy Bitmain stock. Since Bitmain began its Ethereum treasury strategy through April 14th, 2026, they've raised approximately 19. 3 billion dollars through the issuance of new shares and warrants. As of April 14th, they had 4. 9 million Ethereum tokens. As of the time of recording this video, Ethereum tokens trade for $2,300 each. So Bitmain's total ethereum Holdings are worth $11. 2 billion they also own 100 million shares of Aiko which are worth $87 million and a 4% stake in Beast Industries which is worth $180 million at cost. As of April 14th, they also had $720 million of cash on hand. If you add up the value of all their assets as of April 14th, it comes out to $12. 2 billion. So in the year of Bitmain's ethereum treasury strategy, they effectively turned $19 billion into $12 billion. They destroyed $7 billion of value. Bitmain acquired most of its ethereum in 2025 when its price was much higher than it is now. As of April 14th, Bitmain's average cost basis for its ethereum Holdings was approximately $3,700 per token. So they are now underwater by almost 40%. Over the past year, Bitmain has indeed accumulated a large number of ethereum tokens. But they have done this by issuing new shares. If you look at a chart of Bitmain's ethereum Holdings next to its share count, the two metrics have increased in tandem. In fact, the dilution has actually exceeded the rate of ethereum accumulation in recent months. Ethereum Holdings per share peaked in November of 2025 and has been gradually declining ever since. This is because Bitmain no longer trades at a significant premium to its net asset value. It's difficult to know Bitmain's precise market cap or net asset value. These numbers change literally every day as they issue more shares and buy more ethereum. At any given time, their share count and net asset value is likely to be materially different from what is disclosed in their most recent SEC filings. But we know that as of April 14th, Bitmain had 551 million shares outstanding and a share price of $21. 50. That gave them a market capitalization of approximately $12 billion. Their net asset value at the time was $12. 2 billion. So they now trade at a slight discount in that asset value. This development was completely predictable. In the beginning, Bitmain's share count was relatively small. Unsophisticated retail investors and momentum traders pumped up the share price to absurd levels. Over time, Bitmain's share count has exploded. They eventually run out of fools to buy their overvalued stock. So, the share price premium collapses. Once collapses, they can no longer increase Ethereum per share, and the entire bull case collapses as well. All right, guys. That wraps it up for this video. What do you think about Bitmain? Let us know in the comment section below. As always, thank you so much for watching, and we'll see you in the next one. Wall Street Millennial, signing out.