Concerns about the financial viability of corporate crypto treasury firms are escalating as BlackRock advances with a staked Ether ETF, a development analysts suggest could directly challenge existing digital asset treasuries.
BitMine Immersion Technologies, the largest corporate holder of Ether (ETH) globally, has reported an unwelcome loss of $1,000 per ETH, resulting in an overall unrealized loss totaling $3.7 billion. This information was revealed in a report from crypto insight firm 10x Research released on Thursday.
The noticeable decline in net asset value (NAV) among these firms has made it increasingly challenging to draw in new retail investors, while many current shareholders find themselves “trapped” unless they are willing to incur significant losses, wrote Markus Thielen, the founder of 10x Research, in a LinkedIn post.
“When the premium inevitably shrinks to zero, as it is doing now, investors find themselves trapped in the structure, unable to get out without significant damage, a true Hotel California scenario.”
“Cuando el premium inevitablemente se reduce a cero, como está sucediendo ahora, los inversores se encuentran atrapados en la estructura, incapaces de salir sin grandes daños, un verdadero escenario de Hotel California.”
Thielen remarked that, unlike exchange-traded funds (ETFs), digital asset treasury companies, or DATs, often employ complex and opaque fee structures akin to those found in hedge funds, which can gradually diminish returns.
BitMine, Ethereum, right-hand side (RHS) price. Source: 10X Research
The mNAV ratio compares a company’s enterprise value to the worth of its crypto holdings. A mNAV exceeding 1 allows companies to raise capital by issuing additional shares to acquire more digital assets, whereas values below 1 hinder attempts to increase capital and holdings.
As per data from Bitminetracker, BitMine’s basic mNAV stood at 0.77, while its diluted mNAV was recorded at 0.92.
BitMine currently holds approximately 3.56 million ETH, corresponding to about $10.7 billion, constituting approximately 2.94% of the total Ethereum supply with an average cost basis of $4,051 per ETH.
Other DATs are also grappling with significant declines in their mNAV, including Strategy, Bitmine, Metaplanet, Sharplink Gaming, Upexi, and DeFi Development Corp.
BlackRock introduces staked Ether ETF
BlackRock has filed to register a new staked Ether ETF in Delaware, which represents the first step towards the $13.5 trillion asset management firm’s expansion into Ethereum products, as reported by Cointelegraph on Thursday.
BlackRock Staked Eth ETF registration
The proposed ETF by BlackRock is poised to deliver a low-cost, yield-generating fund, devoid of the hidden costs that are typically associated with conventional treasury firms. This move might raise questions about the sustainability of DATs, according to 10x Research.
As more investors recognize that BlackRock’s management fee of 0.25% is significantly lower than the hidden costs tied to DATs, an increase in investment reallocations toward this upcoming staked Ether fund is anticipated.
Additionally, asset managers REX-Osprey and Grayscale have already launched their own staked ETH ETF products in September and October.
