BitMine’s efforts to turn one of the world’s largest corporate Ethereum holdings into a recurring revenue stream generated nearly $46 million from staking in the last quarter.
However, option losses of $92.1 million outweighed these gains, while rising financial costs and aggressive stock issuance further worsened the financial situation for existing shareholders.
The company reported that revenue for the fiscal third quarter ended May 31 jumped to $46.5 million from $2.1 million a year earlier. Approximately 98%, or $45.7 million, came from staking and verification as BitMine accelerates its transition from Bitcoin mining to an Ethereum-focused financial model.
Despite this growth, the company posted a net loss of $83.6 million, compared to a loss of $623,000 in the year-ago period.
Option losses wipe out BitMine’s early Ethereum staking profits
The biggest immediate impact on BitMine’s quarterly results was the company’s options strategy.
BitMine recorded a loss of $92.1 million on Ethereum-linked derivatives during the quarter. This is approximately double the revenue earned from staking operations over the same three-month period.
The company said $78.6 million of the loss was due to the impact of option contracts that expired during the period, and an additional $14 million was due to the exercise of positions. The $534,000 gain from the contract remaining open was only a small offset.
BitMine did not engage in any derivatives trading in the comparable quarter last year, marking a sharp change in the risk profile of its treasury operations.
In the first nine months of the fiscal year, derivative losses totaled $133.3 million. This included losses on exercised contracts of $79.3 million and losses on expired positions of $54.5 million, partially offset by gains on open contracts of $515,000.
During the same period, BitMine generated $56.9 million through staking and verification. Derivative losses were therefore more than double the income earned by staking ETH to help validate transactions on the Ethereum network.
Bitmine said its strategy primarily consists of selling put options as part of a broader financial management program.
Although such contracts may generate premium income or facilitate asset purchases, they may also result in significant losses if market prices move against the seller or if the contract is settled on unfavorable terms.
The scale of BitMine’s losses suggests that the company’s attempts to earn additional profits from options have so far offset revenue from its verification infrastructure.
Meanwhile, the company’s general and administrative expenses also increased to $37.3 million from $744,000 in the same period last year. Management cited digital asset custody and treasury management fees, salary increases, and increases in cash and stock-based compensation for directors as key drivers of this increase.
Prior to the digital asset valuation change, staking revenue still covered the company’s quarterly cost of goods sold and administrative expenses. Even after excluding several non-cash items, BitMine’s own non-GAAP calculations resulted in an adjusted net loss of approximately $70.8 million.
This distinction is central to the application. While the verification business is starting to generate meaningful recurring revenue, broader financial strategies are eating away at that profit.
Financial growth leads to shareholder dilution due to BMNR stock sale
BitMine’s rapid accumulation of Ethereum was primarily financed through the public stock market, with most of the funding burden placed on public shareholders.
During the nine months ended May 31, the company sold approximately 340.7 million shares of BMNR stock through its at-the-market program, raising $11.87 billion, excluding issuance costs. During the same period, BitMine spent approximately $11.69 billion on ETH purchases.
The resulting dilution was considerable. Common shares outstanding increased 149% in nine months, from 232.4 million shares at August 31, 2025 to 579.7 million shares at the end of May 2026. The number of shares continued to increase after the quarter, reaching 603.2 million shares by July 9th.
As of May 31st, this equity-funded expansion allowed BitMine to accumulate 5.42 million ETH with a cumulative cost basis of $19.05 billion. The company’s ETH holdings have expanded to 5.7 million ETH at the time of writing.
Meanwhile, total holdings were valued at $10.86 billion as of May 31, and the position was approximately $8.2 billion, or 43%, below cost at quarter end.
This decline accounted for most of the company’s $9.04 billion in unrealized losses on digital assets during the first nine months of the fiscal year. Bitmine posted a total net loss of $9.1 billion during the same period.
The magnitude of the price drop highlights the exposure shareholders assumed as Bitmine issued shares to acquire ETH at a price well above its May 31 book value.
Still, the company’s shareholders approved an increase in authorized common stock in January from 500 million to 50 billion.
This authorization does not require BitMine to issue the full amount, but it does give management sufficient ability to continue raising capital for digital asset purchases and other investments.
Bitmine warned that the Treasury’s ability to expand is partially dependent on continued access to capital markets. A decline in ETH, a decline in BitMine’s stock price, or a decline in investor demand could make additional capital raising more expensive or limit the company’s ability to issue securities on favorable terms.
Therefore, this model depends on more than staking yields and eventual Ethereum price appreciation. It also requires shareholders to remain motivated to fund further accumulations despite rapid dilution and a financial position with billions of dollars in unrealized losses.
Long-term contracts increase the cost of generating ETH yield
As BitMine expands staking to offset Treasury volatility, the contracts supporting these operations add fixed and revenue-linked costs, narrowing the economics of the strategy.
The company recorded $12.8 million in quarterly charges under a 10-year consulting agreement with Ethereum Tower, a third-party service provider that provides consulting, asset management, custody, and staking services.
This amount represents approximately 28% of the staking and verification revenue generated during the period.
Expenditures under this contract amounted to $37.5 million during the first nine months of the fiscal year. BitMine expects annual costs to be in the range of $40 million to $50 million, based on tiered fees calculated on the value of digital assets under management.
Contracts cannot be canceled except in limited circumstances. If BitMine terminates the agreement without cause, the company could be required to pay Ethereum Tower 85% of the fees it would have incurred during the remaining term.
Additionally, BitMine signed a separate 10-year managed services agreement with Ethereum Tower following its acquisition of Pier Two, the business behind the MAVAN validator business.
Under that arrangement, Ethereum Tower received a 2% membership interest in MAVAN and was entitled to monthly payments calculated as a percentage of native staking rewards generated through the platform.
BitMine had not recorded any costs under the second agreement as of May 31st. Therefore, the revenue-linked costs associated with that contract were not yet reflected in the company’s reported staking margin.
The company said that a significant portion of its ETH holdings are staked through MAVAN, and that it expects staking rewards to exceed asset management costs.
The latest quarter provided early confirmation of that expectation at the operating level. Before the crypto valuation change, staking revenue covered the cost of goods sold and administrative expenses.
However, total staking revenue alone is not a measure of economics, given long-term consulting fees, future revenue share payments, and extensive financial management expenses.
No debt, but BitMine’s dependence on capital markets deepens
BitMine remained slightly leveraged at the end of May, with $340.3 million in cash, $433.1 million in working capital, and no traditional debt.
Total debt was approximately $30.1 million against reported assets of $11.63 billion, most of which consisted of Ethereum and other digital assets.
Therefore, the balance sheet did not indicate an immediate solvency crisis. However, BitMine used $287.6 million in cash from operating activities during the first nine months of its fiscal year.
The company said that part of the outflow was influenced by legal, advisory, consulting, and capital raising costs associated with the expansion of the ETH vault.
After the quarter, BitMine raised an additional $273.8 million by selling 3.5 million shares of BMNP stock, a 9.5% perpetual preferred stock.
The offering strengthened the company’s immediate liquidity, but also created an estimated annual preferred dividend obligation of $33.25 million. Although this security is equity rather than traditional debt, it adds a new regular claim on BitMine’s resources, with a higher status and higher dividend rate than common shareholders.
Management said existing cash, expected operating cash flows, and access to shelf registration and ATM programs should provide sufficient liquidity for at least the next 12 months.
Its valuation depends in part on continued access to capital markets. If Ethereum’s price stagnates, Bitmine’s stock price declines, or investors become reluctant to issue more, the company could face higher funding costs and less flexibility.
BitMine’s latest filing thus presents two contradictory realities.
The company has built a staking business that can generate tens of millions of dollars in quarterly revenue and cover core operating expenses before the valuation of cryptocurrencies changes.
At the same time, options losses outweigh their gains, long-term contracts significantly increase management costs, and the expansion of the ETH treasury relies on equity issuance, with the number of outstanding shares more than doubling.
BitMine’s long-term economics will therefore depend on whether staking income can continue to outweigh its financial costs and option losses, whether the company can maintain access to capital, and whether Ethereum recovers enough to close the billion-dollar gap between the cost and market value of its holdings.
(Tag translation) Featured
