BitMine staking income was wiped out by Ethereum options losses

BitMine's latest quarter shows how an Ethereum treasury can produce real yield, while still leaving shareholders worse off. The company generated $45.7 million from staking and validation in the fiscal third quarter ended May 31, almost all of its $46.5 million in revenue. But that income was more than erased by a $92.1 million loss on Ethereum-linked options, leading to an $83.6 million net loss for the quarter.

BitMine said most of the derivatives loss came from expired and exercised contracts. Over the first nine months of the fiscal year, derivative losses reached $133.3 million, compared with $56.9 million from staking and validation over the same period. The company said its treasury strategy mainly involved selling put options tied to ETH.

The balance sheet tells a larger story. During the first nine months of the fiscal year, BitMine sold about 340.7 million shares and raised $11.87 billion, then spent about $11.69 billion buying ETH. Outstanding shares rose 149% to 579.7 million by May 31, then to 603.2 million by July 9.

As of May 31, BitMine held 5.42 million ETH with a cumulative cost basis of $19.05 billion, but those holdings were valued at $10.86 billion. The company also faces long-term staking-related fees, including a consulting agreement expected to cost $40 million to $50 million a year.