Odaily Planet Daily reports: On June 3, Bitmine, Tom Lee’s Ethereum treasury company, announced plans to publicly offer $300 million in 9.50% perpetual preferred shares, with dividends paid weekly in cash. Previously, at the end of May, Strategy sold its first bitcoins in four years—32 BTC, worth approximately $2.5 million—to pay preferred share dividends, triggering a market crash: Bitcoin dropped below $65,000 and fell over 14% within two trading days.
Two factors highlight the shared challenge facing DAT companies: after the mNAV (market value per unit of crypto held, i.e., how much the market is willing to pay for each dollar of crypto on the company’s balance sheet) fell below 1, the equity financing channel effectively closed. Dividends and debt obligations are fixed costs, forcing the company to sell crypto to meet payments—yet selling crypto further increases selling pressure, creating a downward spiral. Currently, Strategy and Bitmine have mNAV ratios of 0.82 and 0.80, respectively.
SoSoValue researchers believe that the funding dynamics of this Bitcoin cycle were driven sequentially by two engines: first, DAT companies taking on debt to buy Bitcoin, followed by sustained net inflows into spot ETFs. Now, both engines have stalled—SoSoValue’s ETF and coin-stock dashboards show that BTC spot ETFs have experienced 12 consecutive days of net outflows, totaling nearly $4 billion; ETH spot ETFs have seen 16 consecutive days of net outflows, accumulating approximately $800 million; and the DAT camp, led by Strategy and Bitmine, has collectively fallen below their mNAV. With both major sources of new capital drying up, whether the DAT companies’ crisis marks the bottom of this crypto cycle remains to be seen.