Bitmine is closing in on the limit it set for its Ether treasury strategy. At Token2049 in Singapore on Oct. 7, Bitmine chairman Tom Lee said the company will stop buying ETH once its holdings reach 5% of Ethereum’s total supply, calling 5% a hard cap.
Bitmine said that as of Oct. 4 it held 6,016,414 ETH, equal to about 4.9% of total supply. That leaves less than 100,000 ETH before the company reaches the ceiling. Based on its recent pace of purchases, the target could be filled in roughly a month and a half.
That puts the market close to losing one of its most stable buyers over the past year. At the same time, spot ETH exchange-traded funds have recently seen continued outflows, and ETH fell about 8.2% on Oct. 7 and Oct. 8 combined. The question now is whether the market can absorb new supply without Bitmine’s bid.
Bitmine had been absorbing most of Ethereum’s new supply
Bitmine launched its ETH treasury strategy on June 30, 2025, and has bought on a weekly basis since then. The company refers to its goal of holding 5% of Ethereum’s total supply as its “5% alchemy.”
Lee said Bitmine originally thought it would take five years to reach that target. Instead, it got there in a little over a year. At its fastest pace, the company bought more than 100,000 ETH in a single week. Starting in May this year, Bitmine slowed its pace on purpose, cutting weekly purchases to the tens of thousands, then to around 15,000 ETH in recent weeks. Even so, Bitmine has added more than 1 million ETH in 2026 alone.
According to SoSoValue, the net asset value of U.S. spot ETH ETFs stood at about $15.64 billion as of Oct. 8, equal to roughly 5.17% of Ethereum’s market capitalization. Bitmine alone accounts for about 4.9% of supply, putting its holdings on a scale comparable to the entire U.S. spot ETH ETF segment.
The importance of that demand becomes clearer when viewed against Ethereum’s supply mechanics. After Ethereum moved to proof-of-stake, new ETH began to be issued as rewards to stakers, with issuance rising alongside the amount staked across the network. On the other side, base fees paid by users are burned. After the Dencun upgrade in 2024, fees on layer-2 networks dropped sharply, and ETH burn fell with them, pushing the network back into net inflation.
Data from ultrasound.money showed that over the past seven days, Ethereum issued 20,876 ETH and burned just 655 ETH. That works out to average net issuance of about 2,980 ETH a day, worth roughly $7.22 million using the article’s price reference, with annualized supply growth of about 0.86%.
Bitmine said in a company announcement that it bought 15,112 ETH on the market last week, equal to about 72% of ETH issued over the same period. In practical terms, one company had been absorbing roughly seven-tenths of Ethereum’s daily new supply.
Even that demand did not hold up the price. The article noted that after ETH peaked in October 2025, the crypto market entered a bear market. ETH rebounded notably in the third quarter, then weakened again after entering October, leaving it down more than 40% over the past year.
After the 5% cap, Bitmine could shift from buyer to seller
The 5% threshold was not always framed as a hard ceiling. In an earlier interview, Lee said that if Ethereum applications kept expanding and more companies began holding ETH, owning more than 5% could still be reasonable, and Bitmine might revisit the issue in 2027.
Lee also said at the time that Bitmine’s roughly $300 million in annual staking income was enough to cover the $30 million to $35 million in annual dividends tied to its 9.5% Series A preferred stock, leaving the company with no reason to sell ETH for funding needs.
His language has now tightened. Lee said 5% is a hard cap and Bitmine will not hold more than that share of ETH. In his view, a fixed ceiling means shareholders do not need to worry that the company will keep raising money to buy more crypto, and BMNR would have a better chance to outperform ETH in an up market.
That stance is tied to the company’s position over the past year. For treasury companies, once the stock trades below the value of the assets it holds, issuing more shares to buy crypto dilutes the amount of ETH backing each share. Bitmine has already repurchased 21 million shares this year. Lee said in a company announcement that this was the largest stock buyback ever carried out by a crypto treasury company.
Some crypto KOLs have argued that the hard cap removes the equity dilution risk hanging over BMNR. Lee said he agreed with that view. For the ETH market, the implication is straightforward: the exit of a persistent buyer is now largely set.
That does not mean Bitmine’s holdings will stay frozen once purchases stop. Lee has also said that after reaching 5%, the company could sell staking rewards it receives in order to maintain its ownership ratio.
According to Bitmine, as of Oct. 4 it had staked 5,067,309 ETH, or 84% of its holdings. Its seven-day annualized yield was 2.63%, and expected annualized staking income was about $363 million. On that basis, Bitmine would receive roughly 133,000 ETH in rewards per year.
Ethereum’s supply is still growing as well. The article estimated annual net supply growth at about 1.05 million ETH. Five percent of that is about 53,000 ETH, which Bitmine could keep without moving above its cap. To maintain its share near 5%, the company may need to sell about 80,000 ETH in rewards each year.
In size terms, 80,000 ETH is worth about $200 million at current prices, or less than $600,000 a day. The direct market impact would be limited. The more important change is the direction of flow: Bitmine may go from a buyer absorbing around 70% of new weekly supply to a seller releasing a smaller amount of ETH on a continuing basis.
Lee has said principal holdings are not for sale. The roughly 5.07 million ETH already staked continue to generate income for the company.
ETF flows, exchange balances and other treasury firms are not filling the gap yet
With Bitmine nearing the end of its buying program, attention has shifted to other possible sources of demand. So far, the main channels do not show a clear replacement.
ETF data is one example. SoSoValue showed that spot ETH ETFs posted net inflows in both August and September as ETH rebounded, then turned to net outflows in October. Since Sept. 29, the products have recorded net outflows for eight straight trading days, totaling about $641 million. Of that, $579 million has left since the start of October.
The days around Lee’s remarks were especially weak. On Oct. 6, spot ETH ETFs saw $202 million in net outflows, almost all of it from BlackRock’s ETHA. Another $161 million left on Oct. 7, followed by $72.54 million on Oct. 8.
Exchange data points in a similar direction. Binance proof-of-reserves data showed user ETH balances fell 4.61% in September, equal to about $499 million, while user BTC holdings rose by about $537 million over the same period.
Other ETH treasury companies are also in a weak position to take over. When a company’s stock trades below the value of the crypto it holds, the model of issuing shares to buy more coins becomes difficult to sustain. SharpLink, the second-largest ETH treasury company, bought only about 5,000 ETH in June when ETH was trading at lower levels. That was its first increase in eight months.
After that, most of SharpLink’s growth came from staking rewards. Lookonchain said that by the end of September, SharpLink held about 892,100 ETH and had accumulated 27,900 ETH in staking rewards.
Still, Lee said earlier this month that ETH treasury companies collectively hold 7% of Ethereum supply today, and that figure could rise to 15% in this cycle. On that math, other institutions would still need to buy about 9.8 million ETH after Bitmine stops.
Staking demand looks firmer, but not all of it is new demand
Staking data is somewhat stronger. As of Oct. 6, about 1.5 million ETH was waiting to enter staking, while about 767,000 ETH sat in the exit queue. The entry queue was clearly larger than the exit queue.
But that picture also needs context. The exit queue had previously climbed to 851,000 ETH after MetaMask disclosed a security incident on Sept. 30. Lido said the ETH withdrawn as a precaution would be gradually restaked, meaning part of the current entry queue reflects returning ETH rather than entirely new demand.
The market is split on what Bitmine’s exit means for ETH
Lee remains constructive on Ethereum’s outlook. He said the crypto bull market began in August and could become the largest on record, driven by institution-led asset tokenization, intergenerational wealth transfer, treasury companies absorbing supply, and on-chain payments by AI agents.
Crypto KOL Lanhu also said Bitmine was right to stop at 5%. After accumulating at lower levels, Lee’s next task, in that view, is to build the narrative for ETH and push Ethereum as the settlement layer for an on-chain Wall Street.
Others argue that 5% is simply a company-defined ceiling, and Bitmine stopping its purchases does not mean ETH must fall. Even so, once Bitmine steps back, ETH will have one less stable large buyer, leaving price action more dependent on ETF flows, staking demand and other institutions. That could mean larger swings.
There is also a concentration argument. From that perspective, stopping purchases is a form of restraint: a single institution can become the largest participant, but should not try to dominate Ethereum.