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1. Bitmine ethereum holdings end the fiscal year deep below cost
Bitmine Immersion Technologies (BMNR), the ether treasury company chaired by Tom Lee, said in its annual report filed with the SEC on November 10 that its Ethereum holdings of 5,901,837 ETH were worth $14.56 billion at the end of its fiscal year on August 31, 2026, about $5.4 billion below their $19.95 billion cost. The company also said its internal controls over financial reporting were still not effective.
The Form 10-K covers the 12 months that ended on August 31 and marks the second consecutive annual report in which management concluded that the company's controls over financial reporting fell short. The filing also disclosed a net loss of $6.31 billion for the year, a $143.7 million net loss on derivatives referenced to ether, and a new fee arrangement for staking its tokens.
An ether treasury company is a publicly traded business that holds Ether (ETH) as its main treasury asset, giving stock market investors indirect exposure to the cryptocurrency. Bitmine has become one of the most prominent firms using that model, and its results are closely tied to the price of ether.
2. How much Ethereum does Bitmine hold?
Bitmine held 5,901,837 ETH on August 31, 2026, roughly 4.9% of ether's circulating supply, according to its 10-K. A holdings update the company published on November 9 showed the stake had grown to 6,070,092 ETH, or about 4.97% of supply.
Those figures bring the company close to its stated goal of owning 5% of all ether. Austin Campbell, founder of Zero Knowledge Group, said on an October podcast appearance that Lee had told him Bitmine would not go beyond 5% and that the company then held about 4.9%. That account came from Campbell, not from a statement by Bitmine.
The gap between fair value and cost underscores how much the treasury model depends on the direction of the underlying asset. Bitmine paid a total of $19.95 billion for the ether it held at year-end, and the market value of that position on August 31 was $14.56 billion. Because the company reports the holdings at fair value, that decline flows through its income statement as an unrealized loss.
3. Control weaknesses persist for a second year
Bitmine's management first reported material weaknesses in its internal control over financial reporting as of August 31, 2025. Those weaknesses spanned all five components of the COSO framework, the internal-control model published by the Committee of Sponsoring Organizations of the Treadway Commission and widely used by U.S. public companies to evaluate their controls.
The five COSO components cover the control environment, risk assessment, control activities, information and communication, and monitoring. A material weakness that touches every one of them indicates a broad problem with how a company produces and checks its financial statements, rather than a single isolated gap.
During fiscal 2026, Bitmine took several steps to fix the problems. It brought in outside advisors, installed an enterprise resource planning system and hired additional accounting staff. Many of the new controls, however, had not been operating long enough by year-end for management to conclude that they work. The filing states that management concluded that material weaknesses continued to exist as of August 31, 2026.
In April, Bitmine also replaced its auditor, Bush & Associates, with KPMG, one of the Big Four accounting firms. A switch to a larger audit firm is often part of a broader effort to strengthen financial reporting as a company grows, although it does not by itself resolve existing control weaknesses.
4. Why material weaknesses matter to investors
Internal control over financial reporting is the set of processes a company uses to make sure its published numbers are accurate and complete. When management reports a material weakness, it is acknowledging a reasonable possibility that a significant error in the financial statements might not be prevented or caught in time.
For a company whose balance sheet is dominated by a single volatile digital asset worth many billions of dollars, the reliability of accounting for that asset is central. Valuation, custody records, staking income and derivatives positions all need to be tracked precisely. A second consecutive year of ineffective controls means investors are still relying on financial statements produced under a system that management itself says is not yet working as it should.
The disclosure does not mean that any specific figure in the report is wrong. It means the safeguards meant to catch errors have not yet been shown to function reliably, which is why companies with such findings typically describe remediation plans and report on progress in later filings.
The arrival of KPMG as auditor adds another layer of scrutiny going forward. An outside audit firm tests a company's financial statements and, for larger public companies, its internal controls, so the remediation work Bitmine began in fiscal 2026 will be examined as part of future audits.
5. A $6.31 billion loss despite surging revenue
Bitmine reported a net loss of $6.31 billion for fiscal 2026, compared with net income of $348.6 million a year earlier. The swing was driven mostly by unrealized declines in the value of its digital assets.
Revenue, by contrast, rose sharply to $124.8 million from $6.1 million in the previous year. Staking and validation activity accounted for about 97% of that total, showing how thoroughly the company's operating business has shifted toward earning rewards on the ether it holds.
Staking on Ethereum involves locking up ether to help validate transactions and secure the network in exchange for rewards. For a treasury company holding millions of tokens, staking turns an otherwise idle balance into a source of recurring income, though that income remains small relative to the price swings in the underlying holdings.
The filing also showed a $143.7 million net loss from derivatives referenced to ether. Bitmine had no such derivatives positions open at the end of the fiscal year.
Derivatives referenced to ether are contracts whose value moves with the price of the cryptocurrency, such as futures or options. Companies can use them to hedge, to add exposure or to generate income, but they can also produce losses when the market moves against the position. Bitmine's filing reports the net result for the year without the open exposure carrying into the new fiscal period.
6. How the ether treasury model ties results to the market
Bitmine's year shows both sides of the strategy that defines ether treasury companies. By accumulating a large position in a single cryptocurrency, such a company offers shareholders a way to gain exposure to that asset through an ordinary listed stock, often with the added appeal of staking income that a passive holder might not collect. The same concentration means the company's reported profits and losses largely mirror the asset's price.
Fair value accounting makes that link immediate. When the market price of ether falls below what a company paid, the decline shows up as a loss in the period it occurs, even if no tokens are sold. When prices rise, the reverse happens. That is why Bitmine could report revenue growing more than twentyfold while still posting a multibillion-dollar net loss: the operating income from staking was small next to the change in value of nearly six million ETH.
The approach also means that headline losses for a treasury company are not the same as realized cash losses. Bitmine still held its ether at year-end and has continued to add to the position since. Whether the $5.4 billion gap between cost and value narrows or widens depends on where ether trades in the periods ahead, not on any decision recorded in the annual report.
Holding close to 5% of a major cryptocurrency's circulating supply also gives a single company an unusually large presence in that asset's market. Because most of that ether is put to work through staking, the company's holdings also tie it directly to the process of validating transactions on the Ethereum network.
7. A new 1.5% staking fee with an Ethereum Tower affiliate
After the fiscal year closed, Bitmine ended its management services agreement with Ethereum Tower LLC. The termination took effect on September 3, and the company paid no termination fee.
One day later, MAVAN, Bitmine's Ethereum staking platform, signed a 10-year advisory agreement with American Validator LLC, an affiliate of Ethereum Tower. Under that agreement, American Validator receives 1.5% of the staking rewards generated on Bitmine's staked ether.
Bitmine described the new arrangement as simpler and lower in cost. Bitmine did not set out a direct comparison with the fees under the previous agreement, so the size of any savings is not clear from the disclosure.
A fee tied to staking rewards links what the advisor earns to the income the staked ether produces. With a holding of the size Bitmine has accumulated, even a percentage that looks small can add up to a meaningful sum over a decade-long contract, which is why the terms of such agreements draw attention from shareholders.
8. What's next: a transition report for the shorter period
Bitmine is changing its fiscal year-end from August 31 to December 31. As a result, the company expects to file a transition report covering the four months from September 1 through December 31, 2026.
That report will be the next formal look at Bitmine's finances. It will show how its ether holdings, which had already grown to 6,070,092 ETH by November 9, are valued at the end of the calendar year, how much the new staking arrangement with American Validator costs in practice, and whether management can report progress on the material weaknesses that have now persisted across two annual reports.
Investors will also be watching how close the company comes to its 5% ownership target. At 4.97% of supply as of its November 9 update, Bitmine is within a narrow margin of that goal, which raises the question of how its strategy evolves once the target is reached.