Culper Research published a short report on Thursday, disclosing short positions in Ether and Bitmine (BMNR). The report argues that Ethereum's economic model has severely malfunctioned post-Fusaka upgrade, with block space glut and transaction fees falling roughly 90%, pushing validator income and staking yields into a "death spiral."
Fee Collapse After Fusaka Upgrade
According to the report, Ethereum's December upgrade created excessive block space supply, driving transaction fees down by about 90% from pre-upgrade levels. Validators partially rely on those fees for revenue, and the resulting yield compression "has severely damaged Ethereum's economic model." Culper Research warned this could create a vicious cycle: declining validator earnings reduce staking participation, undermining network security.
To support the bearish thesis, the report cited Lookonchain data showing Ethereum co-founder Vitalik Buterin sold nearly 20,000 Ether this year, worth roughly $40 million at current prices—a signal of insider caution.
"High Activity" Is Just Address Poisoning
Bitmine chairman Tom Lee had previously touted rising transaction volumes and active addresses as signs of a strong fundamental base. Culper Research dismissed that as misleading, claiming the apparent "activity surge" is largely driven by address poisoning attacks—malicious dust transactions meant to pollute on-chain records, not organic user growth.
Bitmine's $7.4B Unrealized Loss
The short seller also took aim at Bitmine, one of the largest corporate buyers of Ether. Since July last year, the company has accumulated about 4.4 million ETH as part of its treasury reserve strategy. But with the price correction, 45% of those holdings are underwater, sitting on an unrealized loss of $7.4 billion. Culper Research argues that Bitmine's continued buying "distorts market signals," and any forced liquidation or reduction could accelerate a price decline.
Disclaimer: This content is for informational purposes only and does not constitute investment advice.