BitMine Immersion Technologies, led by Tom Lee, has announced plans to issue up to $300 million in perpetual preferred stock with an annual dividend yield of 9.5%. This Ethereum treasury company is exploring new financing tools to supplement its digital asset holdings.

Preferred stock annual dividend of 9.5%

Company documents show that these preferred shares are perpetual securities. The company can redeem them at different time intervals, with the redemption premium gradually decreasing from 10% to 0%. Holders will also have a put option in the event of certain material events.

The disclosed documents do not specify the exact use of the funds raised, but the market generally views it as a step by Bitmine to find new funding channels for its treasury strategy.

Copying the crypto treasury financing path

Recently, many digital asset treasury companies have been experimenting with tools such as equity, convertible bonds, and preferred stock to reduce their reliance on a single financing method. Strategy has previously launched several types of preferred stock products, while Strive and Metaplanet have also issued dividend-bearing preferred stock.

Bitmine's latest offering is seen as a move to incorporate this approach into its Ethereum treasury strategy. With crypto asset prices declining, companies facing increased funding pressures are paying closer attention to the sustainability of these high-dividend instruments.

Ethereum holdings under pressure

Bitmine has been one of the most aggressive Ethereum buyers in the industry over the past year. The report, citing the company, states that it holds over 5.3 million ETH, equivalent to approximately $10 billion, representing about 4.5% of the circulating Ethereum supply.

However, with the price of ETH falling from around $5,000 in October last year to below $1,800, this position currently represents an unrealized loss of approximately $9 billion. The company's decision to proceed with preferred stock financing at this juncture has also drawn market attention to its future dividend-paying capacity and the pressure on its finances.

The Strategy model was also tested.

It's worth noting that Strategy's preferred stock financing model has recently faced market scrutiny. The report mentions that the company's STRC preferred stock briefly fell to about 5% below its par value of $100 on Wednesday, as investors assessed its ability to maintain dividends amid a weakening Bitcoin price.

While Bitmine's latest offering focuses on the Ethereum treasury, it faces similar challenges: whether the model of relying on high-dividend preferred stock financing can be sustained when the price volatility of underlying crypto assets increases is becoming a focus of market attention.

Additional information:Bitmine did not disclose the use of the funds raised in this filing, nor did it provide a timeline for the completion of the offering.