Ethereum Revenue Plummets to $600 Million: Are BMNR’s ETH Holdings at Risk?

As Layer-1 use cases increase, addressing scalability becomes a critical challenge.

Key Takeaways

Ethereum's revenue has decreased from $2.52 billion to around $604 million this year.
Layer-2 solutions, especially Base, are contributing to a decline in Ethereum's fee capture.
BitMine holds 3.66 million ETH but is experiencing negative market impacts, with a recent drop in token value.
Continuous weak market conditions may force BMNR to evaluate its ETH accumulation strategy.

Base Revenue Chart
Source: Token Terminal

Ethereum Revenue Drop

Ethereum’s revenue has significantly dropped this year, falling from $2.52 billion to approximately $604 million. This decline raises concerns about the implications for BitMine’s (BMNR) heavy investments in Ethereum, especially as Layer-2 solutions like Base contribute to diminishing revenues for ETH. With BMNR holding over 3.66 million ETH and facing impacts from market conditions, the future viability of its ETH strategy is under scrutiny.

Ethereum's Revenue Decline

As Ethereum (ETH) transactions grow, the challenge of scalability has become increasingly pressing. Ethereum has attempted to counteract this by adopting Layer-2 solutions, which aim to enhance throughput, maintain low fees, and manage transaction volumes. However, recent reports indicate that this strategy may be faltering as Ethereum’s revenue has seen a sharp decline this year, dropping from $2.52 billion to approximately $604 million.

Layer-2 Revenue Decline
Source: TradingView (BMNR/USDT)

BitMine’s Speculative Position in Ethereum

BitMine (BMNR) holds a substantial amount of Ethereum, with 3.66 million ETH in its portfolio. Recently, a wallet associated with BMNR added 38,596 ETH within a two-day period. This accumulation was significant but did not cause a noteworthy market shift, as Ethereum remained steady below $3,200. The impact on BMNR was evident, experiencing a daily decline of 9.17% and deepening its quarterly losses, which now stand at 32%. This marks Q4 as BMNR's weakest quarter since Q3 2022.

Despite holding a significant stake in Ethereum, the performance of BMNR indicates that its heavy ETH investments are not yielding expected returns. Additionally, the weak performance of on-chain activities within various Layer-2 solutions suggests there are insufficient transactions to effectively burn fees, leading to a net inflationary situation for Ethereum and muted price pressures.

Conclusion

The continued decline in Ethereum's revenue raises important questions about the sustainability of BitMine's investment strategy in ETH. If current trends persist, BMNR’s heavy accumulation of Ethereum may appear less like a strategic investment and more like a speculative gamble, risking further declines in market value.