Why investors are eyeing ether as the next big crypto treasury play

Business Insider

5 days ago

As the world's second-largest crypto, ethereum has long operated bitcoin's shadow.
Now, it's getting a moment in the spotlight as companies look for new crypto treasury plays beyond the world's largest token. Ether treasury companies are now adding the coin to their balance sheets as a strategic reserve asset.
Crypto mining company BitMine Immersion Technologies announced plans to add ethereum to its balance sheet in late June. It's blown past its initial commitment of $250 million and now holds over $1 billion in Ethereum.
Investors are loving it. Venture capitalist Peter Thiel, and more recently, Cathie Wood of Ark Invest, have invested in BitMine. The stock is up over 480% year-to-date despite not being profitable.
Earlier this week, the ether investment vehicle The Ether Machine announced plans to go public on the Nasdaq via merger with SPAC Dynamix Corporation. The company plans to manage over 400,000 ether, or roughly $1.5 billion.
An ethereum arms race is brewing, and a handful of other companies have also adopted an ethereum treasury strategy recently, such as SharpLink Gaming, Bit Digital, and GameSquare.
Each of these companies has over $100 million of Ethereum reserves. Tom Lee, Fundstrat co-founder and BitMine chairman, announced a goal of acquiring and staking 5% of the overall ethereum supply.
These companies are following Michael Saylor 's Strategy playbook of accumulating digital assets, raising new capital by issuing debt or equity, and then using proceeds to buy more crypto.
The recent focus on ethereum among companies looking to replicate Strategy's success is partly to do with the heightened focus on stablecoins.
Donald Trump signed the GENIUS Act this month, boosting government support for the fiat-backed cryptos. Ethereum, whose blockchain underpins the top stablecoins, is up 65% in a month, with bullishness rising for the crypto and its proximity to the stablecoin ecosystem.
On Monday, the cofounder of The Ether Machine also clarified his firm's strategy, which differentiates from some other crypto treasuries.
"We are not a buy-and-hold treasury," Andrew Keys said on Bloomberg Technology on Monday. "We are an institutional vehicle that is generating risk-adjusted returns actively managing ether."
The Ether Machine plans to generate yield by staking ether, meaning that the company will commit the ether as collateral to validate transactions on the Ethereum network.
"With bitcoin, you have one asset that is moving on that ledger," Keys said. "With Ethereum, you can have and tokenize infinite assets such as stablecoins, real world assets like parcels of land, stocks, bonds, derivatives."
The attention to ethereum doesn't mean investors are forgetting about bitcoin, though. Trump Media and Technology Group announced a $2 billion bitcoin purchase on Monday as it seeks to build out its crypto treasury strategy.
However, Ethereum has been a hot commodity as stablecoins become more widespread this year thanks to crypto-friendly legislation.
Yet, there are still skeptics. Dave Wiesberger, co-founder of crypto algorithmic trading platform CoinRoutes, doesn't think the ethereum enthusiasm and the wave of treasury strategies are entirely justified.
"I don't think there's any difference between that and companies buying stocks of other companies, or buying emerging market debt when they think emerging market debt is cheap," Wiesberger told Business Insider. "It's just capitalizing on public imagination to try to get a premium to your stock price."
"Is the asset underlying that company one that has significant appreciation potential?" Wiesberger added.
To Keys and other ethereum bulls, the answer is yes.
"We believe that ethereum is in the earliest innings of the next generation of the internet," Keys said.