On June 3, Bitmine, the Ethereum treasury company founded by Tom Lee, announced plans to publicly offer 9.50% perpetual preferred stock, aiming to raise $300 million with dividends to be paid weekly in cash. The high 9.5% coupon and perpetual structure mean the company will face rigid weekly cash obligations of roughly $550,000, intensifying its financial strain. This move came on the heels of a landmark event from fellow DAT firm Strategy, which sold Bitcoin for the first time in four years—disposing of 32 bitcoins worth about $2.5 million to meet preferred dividend payments. Although the amount was a minuscule fraction of its holdings, the breach of the “never sell” narrative shattered market confidence, instantly sending Bitcoin below $65,000 and culminating in a more than 14% decline over just two trading sessions. Together, these episodes illustrate the bind DAT companies now find themselves in: relying on high‑cost preferred stock to stay afloat while risking a self‑reinforcing selling spiral.
mNAV Discount Closes Financing Window, Forced Selling Triggers Negative Feedback
The central valuation metric for DAT companies is mNAV—the ratio of market capitalization to net asset value of held crypto, indicating how much premium the market places on each dollar of digital assets. When mNAV exceeds 1, firms can issue equity at a premium to accumulate more Bitcoin and amplify upside. Once mNAV falls below 1, however, equity issuance would effectively sell underlying assets at a discount, making it unacceptable to shareholders and shutting the financing channel in practice. At the same time, preferred dividends and debt obligations do not pause. Strategy and Bitmine both have outstanding perpetual, high‑frequency dividend instruments that lock in continuous cash outflows. With no viable avenue for equity raises, the only option is to sell Bitcoin or Ethereum to pay dividends. Each sale adds supply to the market, depresses coin prices, lowers net asset value, and pushes mNAV even lower—creating a vicious descending cycle. As of the latest data, Strategy and Bitmine quote mNAVs of 0.82 and 0.80, respectively, well below break‑even and signaling deep market skepticism about the sustainability of the DAT model.
Twin Funding Engines Idle, ETF Outflows Compound Liquidity Drain
A SoSoValue researcher notes that this crypto cycle’s funding has been driven sequentially by two engines. The first engine was DAT firms borrowing or issuing securities to purchase Bitcoin, creating a powerful bid; the second engine was the sustained net inflows into spot Bitcoin ETFs after their approval. Now, both engines have stalled. According to SoSoValue’s ETF dashboard and crypto‑equity monitor, the BTC spot ETF has posted net outflows for 12 consecutive trading days, accumulating close to $4 billion—equivalent to an average daily drain of over $330 million. The ETH spot ETF has suffered 16 straight days of net outflows, totaling roughly $800 million. On the DAT side, led by Strategy and Bitmine, companies have universally fallen below mNAV, losing not only their ability to raise fresh buying power but also being forced to reverse course and sell holdings to service preferred dividends. The simultaneous shutdown of both engines places the market in a “liquidity double‑kill”, where incremental capital dries up at the very moment when existing positions are being liquidated.
With both major sources of incremental capital exhausted, whether the unfolding DAT crisis constitutes a bottom for this crypto cycle remains to be seen.