BitMine Locks $1 Billion in ETH in Just 48 Hours: Is a Supply Shortage on the Horizon?

BitMine Immersion Technologies has staked over $1 billion worth of Ether (ETH) into staking contracts within a mere 48-hour period. This significant move highlights the increasing corporate interest in staking, which is leading to a tightening of Ethereum's supply in the market.

Key Takeaways

BitMine staked 342,560 ETH worth over $1 billion in under two days.
Ethereum's staking activity is creating a supply squeeze, with more ETH being locked than released.
The current staking environment shows the entry queue for ETH is much longer than the exit queue, suggesting a shift towards long-term investing.
With about 35.8 million ETH currently staked, this represents nearly 29% of Ethereum’s total supply.
BitMine has accumulated approximately 4.07 million ETH and aims to control 5% of the total supply.

BitMine Locks $1B ETH in 48 Hours: Is a Supply Squeeze Imminent?

The Current Staking Landscape

BitMine Immersion Technologies has made headlines by moving over $1 billion in Ether into staking contracts in less than 48 hours. According to blockchain data from Lookonchain, the company staked 342,560 ETH right before Sunday, marking one of the largest short-term staking events of the year.

Growing Demand for Staking

Staking refers to the process of locking up Ether within Ethereum's proof-of-stake (PoS) system to contribute to network security while earning a yield that usually falls between 3% and 5% annually, depending on market conditions.

Once ETH is staked, it cannot be readily sold; it must first pass through a validator exit queue. The impact of BitMine’s recent actions is evident, as Ethereum's validator queues have quickened. Current data shows the entry queue has swelled to approximately 12 days and 20 hours, with about 739,824 ETH awaiting staking.

Ethereum Staking Queue

In contrast, the exit queue is at six days and two hours, containing around 349,867 ETH earmarked for withdrawal. This situation is notable for indicating that nearly twice as many validators are preparing to stake Ether compared to those looking to exit, a trend indicating more commitment to long-term investments rather than immediate liquidity.

Market Supply Dynamics Shift

The increasing number of staked ETH signifies a potential supply squeeze. This phenomenon occurs when the demand for an asset increases while the available supply decreases. In Ethereum’s case, staking effectively removes ETH from circulation by locking it into contracts.

With fewer coins available on exchanges, even modest demand can lead to significant price changes, particularly when liquidity is low. Ethereum currently operates in a tighter supply environment than in previous cycles, with roughly 35.8 million ETH, or 28.88% of the total supply, already staked as of late December estimates.

Current Staked ETH

Furthermore, new issuance of ETH has slowed since the transition to proof of stake, while the EIP-1559 fee model continues to burn a portion of transaction fees. This mechanism can sometimes push net issuance into negative territory during periods of high activity, which means staking doesn’t just delay selling but can also limit the circulating Ether supply.

BitMine’s Bold Accumulation Strategy

BitMine's proactive accumulation strategy further exacerbates this supply dynamic. The company, listed on the NYSE American, has chosen Ethereum as its key treasury asset. Evidence from StrategicEthReserve.xyz indicates that BitMine currently controls about 4.07 million ETH, valued at roughly $12.15 billion, which amounts to around 3.36% of the total ETH supply.

The company has set a long-term goal of increasing its stake to 5%. On-chain data from December reveals multiple large inflows, with around 29,462 ETH transferred from BitGo and Kraken wallets, valued at approximately $88 million during that time.

Previous reports disclosed that BitMine procured more than $229 million in ETH over a single week and has acquired over 407,000 ETH in the past 30 days, even as Ether has been trading nearly 40% below its peak.

BitMine Accumulation

Notably, other significant corporate ETH holders are also choosing to stake most of their holdings. SharpLink Gaming, the second-largest corporate stakeholder, recently announced it had staked nearly all of its ETH, earning approximately 9,701 ETH in rewards valued at around $29 million.

Staking Rewards

Similarly, The Ether Machine, the third-largest holder, has fully staked its treasury valued at $1.49 billion and consistently ranks among the top validators in terms of reward efficiency.

These developments come as Ether trades below the $3,000 mark, currently hovering around $2,978 after a slight rebound over the month.