Original title: Tom Lee's latest podcast: We are witnessing ETH's "1971 moment", and 60,000 USD is a reasonable valuation.
Editor’s Note: What is the strongest buying power behind the recent surge of ETH? The answer undoubtedly lies with the ETH treasury company. With the continuous increase in holdings of BitMine (BMNR) and Sharplink Gaming (SBET), the influence over ETH has quietly shifted — for details, please refer to "Revealing the Two Key Players Behind the Recent Surge of ETH: Tom Lee VS Joseph Rubin."
Strategic ETH Reserve data shows that as of September 4th, Beijing time, BitMine's ETH holdings have reached 1.87 million coins, valued at approximately 8.16 billion USD. BitMine's captain Tom Lee has long become the most influential whale in the entire Ethereum ecosystem.
On the evening of September 3rd, Tom Lee participated in an interview on the Level Up podcast under Medici Network. In the conversation, Tom Lee discussed the positioning of ETH in the global financial sector, the rise of BitMine as a leader in ETH treasury, and the macroeconomic conditions surrounding digital assets. Tom Lee also shared his thoughts on the long-term potential of cryptocurrencies, the vision of decentralization, and how BitMine plans to further increase its reserve size.
The following is the original content of the interview, translated by Odaily Planet Daily — for the sake of reading fluency, some content has been omitted.
Host: Could you start by briefly sharing your story? How did you get involved in the cryptocurrency market? (While introducing Tom Lee, the host referred to him as "the best-haired man on Wall Street" in addition to his regular title.)
Tom Lee: Simply put, after graduating from university (Wharton School), my entire career has essentially revolved around one job, which is researching the market. I first worked at Kidder, Peabody & Company, focusing on the technology sector, especially wireless communications, from 1993 to 2007.
That experience taught me some important things. Wireless communication was still in its infancy at that time - there were only 37 million mobile phones globally, and today it has approached 8 billion, growing exponentially. But what surprised me was that many customers were actually very skeptical about wireless technology at that time - in their view, the core business of the telecommunications industry was long-distance and local calls, and mobile phones were just an "upgraded wireless phone" that might become free in the future.
So I realized at that time: fund managers in their forties and fifties often cannot truly understand technological disruption because they are essentially vested interests. After that, I became the Chief Strategist at JPMorgan and held that position until 2014. Then I founded Fundstrat, with the original intention of establishing the first Wall Street company to attempt to "popularize institutional research"—that is, to make research that was originally only available to hedge funds and large asset managers accessible to a broader public. We hoped to open the research services originally provided to hedge funds and large institutions to the public.
Then, around 2017, I started noticing news saying that Bitcoin had broken through 1000 dollars. This reminded me of the time when I was in the foreign exchange team at JPMorgan, where we had discussed Bitcoin multiple times when its price was still under 100 dollars. The core of the discussion was: could this digital currency be recognized as a form of currency?
However, at JPMorgan, everyone's attitude is very negative, believing that Bitcoin is merely a tool for drug dealers and smugglers. But in my 20-year career, I have never seen an asset rise from less than $100 to $1,000, with a market capitalization exceeding $10 billion. This is definitely not something to be ignored; I must study it.
So we started our research. Although I couldn't fully understand at the time why a "proof-of-work blockchain" could serve as a value storage tool, I found that the significant increase of over 90% in Bitcoin from 2010 to 2017 could be explained by just two variables: the number of wallets and the activity level of each wallet.
Based on these two variables, we can even model and predict the possible future trends of Bitcoin. This was the "journey" when I first truly entered the crypto space. So, when the price of Bitcoin was still below $1,000, we released our first white paper. We proposed that if someone treats Bitcoin as a substitute for gold, and it only occupies 5% of the gold market, then the reasonable price for Bitcoin would be $25,000. This was our prediction for the price of Bitcoin in 2022, and by 2022, the price of Bitcoin indeed hovered around $25,000.
Host: You just talked about BTC, but you are also doing some interesting things with ETH. Can we talk about the macro opportunities for ETH?
Tom Lee: For a long time, almost from 2017 to 2025, our core view in the cryptocurrency space has been that Bitcoin occupies a very clear position in many people's portfolios, because it has been validated not only in terms of scale and stability, but more importantly, it can serve as a means of value storage.
When we think again about how investors should allocate in crypto assets aside from Bitcoin, there are many projects on the market — such as Solana, Sui, and various projects that you often write about. But starting this year, we are seriously re-examining Ethereum.
The reason is: I believe that this year the regulatory environment in the United States is developing in a favorable direction, which is causing Wall Street to start taking cryptocurrencies and blockchain more seriously. Of course, the real "killer application" or the so-called ChatGPT moment here is actually stablecoins and Circle's IPO, followed by the "Genius" Act and the SEC's Project Crypto initiative.
I believe there are many positive factors for ETH here, but the main point is — when we observe the asset tokenization projects being advanced on Wall Street, the vast majority of them, whether in dollars or other assets, are being conducted on Ethereum.
Moreover, and more importantly, I believe people need to take a step back and look at what is happening on Wall Street in 2025; it resembles the historical moment of 1971. In 1971, the U.S. dollar decoupled from gold and abandoned the gold standard. At that time, gold indeed benefited, and many people bought gold, but the real core issue was not that gold benefited, but that Wall Street initiated financial innovation—because suddenly, the dollar became fiat currency, no longer backed by gold, and people had to establish new channels for circulation and payment for dollar transactions. Therefore, the real winner is Wall Street.
By 2025, the innovations brought by blockchain are solving numerous problems, and Wall Street is migrating to the crypto "track", which I see as ETH's "1971 moment". This will create huge opportunities to migrate a significant amount of assets and transactions onto the blockchain. Ethereum won't be the only winner, but it will be one of the major winners.
From the perspective of institutional adoption, I've heard a lot of relevant discussions. BTC has become very institutionalized. When I meet with investors, they all know how to build models and how to think about BTC's future value. Therefore, BTC has already entered many portfolios. In contrast, the holding rate of ETH is still very low, more akin to BTC in 2017.
I believe that ETH is not yet truly regarded as an "institutional asset" today, so it is still in a very early stage, which is also the reason I think there is a greater opportunity for ETH.
Host: I know you set a target price for Ethereum at around $60,000. How did you make this prediction?
Tom Lee: Yes, that's right. But I must clarify, (60,000 dollars) this is not a short-term target. So don't come at me on December 31st saying "it hasn't risen that much," this is not the kind of prediction that is to be realized next week.
In fact, I was referring to an analysis we did for ETH, which was completed by Mosaics and some other researchers. Their idea is to view the present as a turning point similar to that of 1971. They considered Ethereum's value from two perspectives: first, as a payment rail, and second, that Ethereum could capture a portion of the payment market share. I believe these two concepts can be combined.
Their assumption is that if you look at the market covered by the banking system and assume that half of it would move to the blockchain, then Ethereum could capture about $3.88 trillion in value; then if you look at Swift and Visa, which can process about $450 billion in payments annually, and assume that each transaction incurs a Gas fee, converting it into network revenue and applying a relatively conservative price-to-earnings ratio of 30, you would arrive at an estimated valuation of about $3 trillion. Adding these two parts together, a reasonable valuation for Ethereum should be around $60,000, which means there is still about 18 times growth potential from now.
Host: Recently, the positive outlook for ETH is largely related to the continued buying by digital asset treasury companies. As the chairman of BitMine, how do you think investors should view different investment avenues, such as making trade-offs between ETFs, spot investments, and treasury company stocks?
Tom Lee: First of all, if someone wants to gain exposure to ETH through an ETF, that’s perfectly fine, as it allows you to invest directly in ETH without a significant price spread, just like the BTC ETF provides you direct exposure to BTC.
But if you look at the treasury company of BTC, MicroStrategy's size is larger than the largest BTC ETF. In other words, more investors are willing to indirectly hold BTC through MicroStrategy than through an ETF. The reason is simple: treasury companies do not give you a static ETH holding; they are actually helping you increase the amount of ETH corresponding to each share. MicroStrategy is an example: when they shifted to a BTC strategy in August 2020, the stock price was about $13, and it has now risen to $400, increasing about 30 times over five years, while BTC itself rose from $11,000 to $120,000 during the same period, increasing about 11 times. This indicates that MicroStrategy successfully increased the amount of BTC held per share, while the BTC ETF remained unchanged during this period.
In other words, an ETF could potentially earn you 11 times your investment over five years, but MicroStrategy, with its treasury strategy, can allow investors to earn even more. They leverage the liquidity and volatility of stocks to continually increase their holdings per share of BTC. Michael Saylor's strategy works like this, from an initial BTC value of $1 or $2 per share to today's value of $227 per share, which is a significant increase.
Host: You just mentioned that traditional investors are showing increasing interest in Ethereum. I'm curious, over the past few months, what changes have you seen in the attitudes of some non-crypto-native institutional clients when discussing treasury companies?
Tom Lee: To be honest, most people are quite skeptical when it comes to viewing crypto treasury. Indeed, many investors in MicroStrategy have made quite a bit of money, but even so, its holders are not as widespread as you might think, because there are still a large number of institutions that simply do not believe in cryptocurrency. For example, a recent survey by Bank of America shows that 75% of institutional investors have zero exposure to crypto. In other words, three-quarters of them have never touched crypto assets at all. So when they see treasury companies, their first reaction is: "It's better to just buy the tokens directly."
So we spent a lot of time in the meeting educating them. Taking BitMine's data as an example, the difference is that the treasury company can help you increase the amount of ETH corresponding to each share. For instance, when we transformed into an ETH treasury on July 8, each share corresponded to only 4 dollars of ETH, and by the update on July 27, each share corresponded to 23 dollars of ETH, an increase of nearly 6 times in just one month. This gap is significant and illustrates the "per-share ETH acceleration effect" brought by the treasury strategy.
Host: There are many ETH treasury companies in the market, but obviously BitMine is the fastest to act. How did you manage to do that?
Tom Lee: I think MicroStrategy has provided a great template. The first BTC treasury company was actually Overstock, but it didn't really convince investors, and its stock price didn't benefit. Saylor is the first person to accomplish this using a more scalable and systematic approach, which has indeed inspired us. So our strategy at BitMine is to maintain an extremely clear and straightforward path, relying entirely on common stock for operations, avoiding complex derivative structures, making it easy for investors to understand at a glance. In the future, we may increase strategies that utilize volatility or market cap size, but the first step is to have a clear strategy that convinces shareholders.
Why is this important? Because investors need to believe that they are buying not just ETH, but a long-term macro trading opportunity. Just like Palantir can achieve a premium valuation, not only because of its products but because shareholders feel they are holding something "meaningful." What we need to do is to make investors understand that Ethereum is indeed one of the biggest macro trading trends for the next 10–15 years.
Host: Regarding the premium topic of treasury companies, Michael Saylor once mentioned that he would more actively use ATMs (issuing new shares in the public market) within a premium range of 2.5 to 4 times. I believe among all treasury companies, you have been more aggressive in increasing net asset value (NAV) through ATMs, right? You even do this at lower premium levels, but it has allowed you to achieve sustained and strong NAV growth. How do you consider the appropriate premium multiples? Just like Saylor said, he is at one extreme, believing that it's not worth significant operations below 4 times. What do you think?
Tom Lee: I think there is a strange mathematical problem here.
In theory, every financial instrument requires a certain trade-off — this might be a bit technical for the audience — common stock is actually a very good financing tool because it gives everyone equal opportunities for appreciation and has no conflict of interest — both new and old shareholders are betting on the company's future success.
However, when you are financing with convertible bonds, the situation is different. Buyers will not only pay attention to the stock price but will also care about capturing volatility, and may even hedge to eliminate volatility. Preferred shares and debt are essentially liabilities—although the ETH treasury company can pay off debts through staking returns, those financings are still debts. Debt holders do not care about the company's success; they only care about the payment of interest.
Therefore, if you introduce conflicting motivations and different incentives when changing the capital structure, it may actually harm the company — too many convertible bonds can suppress volatility, thereby hindering the flywheel effect (volatility is the foundation of stock liquidity).
Therefore, it is difficult for you to accurately calculate the intervals for grading operations. It is also important to remember that in the next round of the crypto winter (which is inevitable), companies with the simplest balance sheets will prevail. This way, you won't be forced to finance at a discount due to payment obligations, nor will you face a natural short position created by derivative structures—leading to more short-selling triggered by coverage requirements when stock prices fall, creating a death spiral. This is why Bitmine maintains a simple structure.
If the premium of the treasury company is only 10% higher than NAV, it is difficult to rationalize the operation of the ATM - mathematically speaking, when issuing stocks at a 1.1x premium, 100% of the circulating shares need to be sold (which doubles the total share capital) to have a positive impact on each share of ETH holdings. However, if operating at a 4x premium, only 25% of the shares need to be sold to double the amount of ETH held per share. I guess Saylor's logic is in this, but my thinking is different; I believe it might be better to think more strategically.
Host: You mentioned the inevitability of the downturn cycle. We have experienced several crypto winters. What impact do you think this will have on treasury companies?
Tom Lee: It's hard to say, but the best analogy might be the oil service industry. The simplest analogy for cryptocurrency treasury companies is oil companies. Investors can buy oil, buy oil contracts (even physical delivery), but many people are buying shares of oil companies, like ExxonMobil or Chevron, which always trade at a premium over proven reserves because these companies are actively acquiring more oil.
When capital markets become unfriendly, companies with more complex capital structures are likely to collapse. During the crypto winter, valuation disparities will be greater, and the companies with the cleanest balance sheets can acquire assets, possibly even trading at a discount below net asset value.
Host: Are you referring to the fact that there will be some mergers/integrations between treasury companies?
Tom Lee: Yes, those people from Bankless mentioned a very good point. They said that MicroStrategy is clearly leading in the Bitcoin treasury race, but in the Ethereum treasury race, there is currently no absolute frontrunner. As it stands, everyone is still able to secure funding smoothly, so it’s not yet time to consolidate.
If there is really going to be integration, I think it is more likely to happen in the Bitcoin treasury market, because Bitcoin has already experienced a significant rise (although I remain bullish and believe it can reach 1 million dollars), while Ethereum is still in an earlier stage of value realization. Therefore, the situation you just described is more likely to occur on top of Bitcoin.
Host: You mentioned earlier about maintaining a clean balance sheet. In a crypto winter, if the company's stock price is discounted, would you consider buying back shares? Would it be achieved through issuing bonds, or would you keep additional cash reserves outside of your ETH positions?
Tom Lee: This is a good question, but we can only discuss it on a theoretical level. First of all, I don't think there will be a crypto winter in the near future. To be clear, we remain bullish on the market, so I don't expect a winter to occur anytime soon. Of course, at some point in the future, there will definitely be one, and by then BitMine will have several sources of cash flow:
First, from our traditional main business;
Second, from staking rewards, as staking income can be converted into fiat currency when necessary for buybacks, theoretically achieving a buyback scale of 3%, which is already quite significant.
Third, consider whether to use the capital market to support the buyback.
At that time, the companies with the cleanest balance sheets could do a lot of things. For example, using ETH as collateral for loans, the market interest rates are known, so there would be many ways to do this, but in practice, each company would be different. If the balance sheet is complex, it is basically impossible to self-protect during a discount.
Host: To maintain BitMine's stock price above its NAV, would you consider mergers and acquisitions? Because this would add value from the perspective of each share of ETH. At what level of discount do you think a merger or acquisition would be meaningful?
Tom Lee: I think every company has its own algorithm. If a company has huge upside potential in ETH but its stock price cannot exceed NAV, then it is simply following the Beta exposure of ETH. Those companies that can achieve a premium must make Alpha choices. In other words, you can buy more ETH to gain Beta exposure, but to surpass it, you must have an Alpha strategy.
The reasons for the discount of each company may vary, including poor liquidity, high debt, complex business operations, etc., all of which can lead to a reasonable premium or discount.
Host: Let's change the topic. Although it's not directly related to BitMine, I want to ask, do you think MicroStrategy will be included in the S&P 500 in September?
Tom Lee: The work of the S&P 500 committee is confidential, but they do it well. If you look at historical data, more than 20% of the index returns every 10 years come from companies that were not included in the index a decade ago. In other words, they (the S&P 500) are actually actively selecting stocks rather than mechanically picking them according to rules.
In fact, their performance is much better than that of the Wilshire 5000, a total market index, and also better than the Russell 1000 (market cap weighted). This indicates that they are not just selecting the largest companies, but are also making thematic judgments. AI is certainly a focus, and Crypto is also very important, while they will consider reducing the weight sensitive to commodities.
Host: Speaking of indices, BitMine is growing rapidly. Is it possible for it to be included in some indices?
Tom Lee: The S&P series is currently not possible because it requires positive net profit, which can only be achieved after we start native staking. The Russell index is quantitative, only looking at trading volume and free float market capitalization. The threshold for the Russell 1000 is about $5 billion, with restructuring occurring every June. Starting from 2026, it will change to once every six months. By this standard, BitMine has already far exceeded the threshold.
Host: I think we are about done with our discussion today. This has been a great conversation. Do you have any final thoughts or key points you would like to leave with the audience?
Tom Lee: I would like to summarize: we are actually witnessing a historic moment in the financial industry. Because blockchain has solved many problems, democratizing finance and breaking the gatekeeper structure that controlled resources in the past. Even when discussing universal basic income, blockchain and cryptocurrencies can provide solutions. Therefore, I believe we should not only remain optimistic about the short-term prices of Bitcoin and Ethereum, but also recognize the profound positive impact they have on society.
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Tom Lee: ETH is迎迎迎迎"1971时刻", a valuation of $60,000 is reasonable.
This article is from: Medici Network
Compiled by｜Odaily Planet Daily（@OdailyChina）；Translator｜Azuma（@azuma_eth）
Original title: Tom Lee's latest podcast: We are witnessing ETH's "1971 moment", and 60,000 USD is a reasonable valuation.
Editor’s Note: What is the strongest buying power behind the recent surge of ETH? The answer undoubtedly lies with the ETH treasury company. With the continuous increase in holdings of BitMine (BMNR) and Sharplink Gaming (SBET), the influence over ETH has quietly shifted — for details, please refer to "Revealing the Two Key Players Behind the Recent Surge of ETH: Tom Lee VS Joseph Rubin."
Strategic ETH Reserve data shows that as of September 4th, Beijing time, BitMine's ETH holdings have reached 1.87 million coins, valued at approximately 8.16 billion USD. BitMine's captain Tom Lee has long become the most influential whale in the entire Ethereum ecosystem.
On the evening of September 3rd, Tom Lee participated in an interview on the Level Up podcast under Medici Network. In the conversation, Tom Lee discussed the positioning of ETH in the global financial sector, the rise of BitMine as a leader in ETH treasury, and the macroeconomic conditions surrounding digital assets. Tom Lee also shared his thoughts on the long-term potential of cryptocurrencies, the vision of decentralization, and how BitMine plans to further increase its reserve size.
The following is the original content of the interview, translated by Odaily Planet Daily — for the sake of reading fluency, some content has been omitted.
Tom Lee: Simply put, after graduating from university (Wharton School), my entire career has essentially revolved around one job, which is researching the market. I first worked at Kidder, Peabody & Company, focusing on the technology sector, especially wireless communications, from 1993 to 2007.
That experience taught me some important things. Wireless communication was still in its infancy at that time - there were only 37 million mobile phones globally, and today it has approached 8 billion, growing exponentially. But what surprised me was that many customers were actually very skeptical about wireless technology at that time - in their view, the core business of the telecommunications industry was long-distance and local calls, and mobile phones were just an "upgraded wireless phone" that might become free in the future.
So I realized at that time: fund managers in their forties and fifties often cannot truly understand technological disruption because they are essentially vested interests. After that, I became the Chief Strategist at JPMorgan and held that position until 2014. Then I founded Fundstrat, with the original intention of establishing the first Wall Street company to attempt to "popularize institutional research"—that is, to make research that was originally only available to hedge funds and large asset managers accessible to a broader public. We hoped to open the research services originally provided to hedge funds and large institutions to the public.
Then, around 2017, I started noticing news saying that Bitcoin had broken through 1000 dollars. This reminded me of the time when I was in the foreign exchange team at JPMorgan, where we had discussed Bitcoin multiple times when its price was still under 100 dollars. The core of the discussion was: could this digital currency be recognized as a form of currency?
However, at JPMorgan, everyone's attitude is very negative, believing that Bitcoin is merely a tool for drug dealers and smugglers. But in my 20-year career, I have never seen an asset rise from less than $100 to $1,000, with a market capitalization exceeding $10 billion. This is definitely not something to be ignored; I must study it.
So we started our research. Although I couldn't fully understand at the time why a "proof-of-work blockchain" could serve as a value storage tool, I found that the significant increase of over 90% in Bitcoin from 2010 to 2017 could be explained by just two variables: the number of wallets and the activity level of each wallet.
Based on these two variables, we can even model and predict the possible future trends of Bitcoin. This was the "journey" when I first truly entered the crypto space. So, when the price of Bitcoin was still below $1,000, we released our first white paper. We proposed that if someone treats Bitcoin as a substitute for gold, and it only occupies 5% of the gold market, then the reasonable price for Bitcoin would be $25,000. This was our prediction for the price of Bitcoin in 2022, and by 2022, the price of Bitcoin indeed hovered around $25,000.
Tom Lee: For a long time, almost from 2017 to 2025, our core view in the cryptocurrency space has been that Bitcoin occupies a very clear position in many people's portfolios, because it has been validated not only in terms of scale and stability, but more importantly, it can serve as a means of value storage.
When we think again about how investors should allocate in crypto assets aside from Bitcoin, there are many projects on the market — such as Solana, Sui, and various projects that you often write about. But starting this year, we are seriously re-examining Ethereum.
The reason is: I believe that this year the regulatory environment in the United States is developing in a favorable direction, which is causing Wall Street to start taking cryptocurrencies and blockchain more seriously. Of course, the real "killer application" or the so-called ChatGPT moment here is actually stablecoins and Circle's IPO, followed by the "Genius" Act and the SEC's Project Crypto initiative.
I believe there are many positive factors for ETH here, but the main point is — when we observe the asset tokenization projects being advanced on Wall Street, the vast majority of them, whether in dollars or other assets, are being conducted on Ethereum.
Moreover, and more importantly, I believe people need to take a step back and look at what is happening on Wall Street in 2025; it resembles the historical moment of 1971. In 1971, the U.S. dollar decoupled from gold and abandoned the gold standard. At that time, gold indeed benefited, and many people bought gold, but the real core issue was not that gold benefited, but that Wall Street initiated financial innovation—because suddenly, the dollar became fiat currency, no longer backed by gold, and people had to establish new channels for circulation and payment for dollar transactions. Therefore, the real winner is Wall Street.
By 2025, the innovations brought by blockchain are solving numerous problems, and Wall Street is migrating to the crypto "track", which I see as ETH's "1971 moment". This will create huge opportunities to migrate a significant amount of assets and transactions onto the blockchain. Ethereum won't be the only winner, but it will be one of the major winners.
From the perspective of institutional adoption, I've heard a lot of relevant discussions. BTC has become very institutionalized. When I meet with investors, they all know how to build models and how to think about BTC's future value. Therefore, BTC has already entered many portfolios. In contrast, the holding rate of ETH is still very low, more akin to BTC in 2017.
I believe that ETH is not yet truly regarded as an "institutional asset" today, so it is still in a very early stage, which is also the reason I think there is a greater opportunity for ETH.
Tom Lee: Yes, that's right. But I must clarify, (60,000 dollars) this is not a short-term target. So don't come at me on December 31st saying "it hasn't risen that much," this is not the kind of prediction that is to be realized next week.
In fact, I was referring to an analysis we did for ETH, which was completed by Mosaics and some other researchers. Their idea is to view the present as a turning point similar to that of 1971. They considered Ethereum's value from two perspectives: first, as a payment rail, and second, that Ethereum could capture a portion of the payment market share. I believe these two concepts can be combined.
Their assumption is that if you look at the market covered by the banking system and assume that half of it would move to the blockchain, then Ethereum could capture about $3.88 trillion in value; then if you look at Swift and Visa, which can process about $450 billion in payments annually, and assume that each transaction incurs a Gas fee, converting it into network revenue and applying a relatively conservative price-to-earnings ratio of 30, you would arrive at an estimated valuation of about $3 trillion. Adding these two parts together, a reasonable valuation for Ethereum should be around $60,000, which means there is still about 18 times growth potential from now.
Tom Lee: First of all, if someone wants to gain exposure to ETH through an ETF, that’s perfectly fine, as it allows you to invest directly in ETH without a significant price spread, just like the BTC ETF provides you direct exposure to BTC.
But if you look at the treasury company of BTC, MicroStrategy's size is larger than the largest BTC ETF. In other words, more investors are willing to indirectly hold BTC through MicroStrategy than through an ETF. The reason is simple: treasury companies do not give you a static ETH holding; they are actually helping you increase the amount of ETH corresponding to each share. MicroStrategy is an example: when they shifted to a BTC strategy in August 2020, the stock price was about $13, and it has now risen to $400, increasing about 30 times over five years, while BTC itself rose from $11,000 to $120,000 during the same period, increasing about 11 times. This indicates that MicroStrategy successfully increased the amount of BTC held per share, while the BTC ETF remained unchanged during this period.
In other words, an ETF could potentially earn you 11 times your investment over five years, but MicroStrategy, with its treasury strategy, can allow investors to earn even more. They leverage the liquidity and volatility of stocks to continually increase their holdings per share of BTC. Michael Saylor's strategy works like this, from an initial BTC value of $1 or $2 per share to today's value of $227 per share, which is a significant increase.
Tom Lee: To be honest, most people are quite skeptical when it comes to viewing crypto treasury. Indeed, many investors in MicroStrategy have made quite a bit of money, but even so, its holders are not as widespread as you might think, because there are still a large number of institutions that simply do not believe in cryptocurrency. For example, a recent survey by Bank of America shows that 75% of institutional investors have zero exposure to crypto. In other words, three-quarters of them have never touched crypto assets at all. So when they see treasury companies, their first reaction is: "It's better to just buy the tokens directly."
So we spent a lot of time in the meeting educating them. Taking BitMine's data as an example, the difference is that the treasury company can help you increase the amount of ETH corresponding to each share. For instance, when we transformed into an ETH treasury on July 8, each share corresponded to only 4 dollars of ETH, and by the update on July 27, each share corresponded to 23 dollars of ETH, an increase of nearly 6 times in just one month. This gap is significant and illustrates the "per-share ETH acceleration effect" brought by the treasury strategy.
Tom Lee: I think MicroStrategy has provided a great template. The first BTC treasury company was actually Overstock, but it didn't really convince investors, and its stock price didn't benefit. Saylor is the first person to accomplish this using a more scalable and systematic approach, which has indeed inspired us. So our strategy at BitMine is to maintain an extremely clear and straightforward path, relying entirely on common stock for operations, avoiding complex derivative structures, making it easy for investors to understand at a glance. In the future, we may increase strategies that utilize volatility or market cap size, but the first step is to have a clear strategy that convinces shareholders.
Why is this important? Because investors need to believe that they are buying not just ETH, but a long-term macro trading opportunity. Just like Palantir can achieve a premium valuation, not only because of its products but because shareholders feel they are holding something "meaningful." What we need to do is to make investors understand that Ethereum is indeed one of the biggest macro trading trends for the next 10–15 years.
Tom Lee: I think there is a strange mathematical problem here.
In theory, every financial instrument requires a certain trade-off — this might be a bit technical for the audience — common stock is actually a very good financing tool because it gives everyone equal opportunities for appreciation and has no conflict of interest — both new and old shareholders are betting on the company's future success.
However, when you are financing with convertible bonds, the situation is different. Buyers will not only pay attention to the stock price but will also care about capturing volatility, and may even hedge to eliminate volatility. Preferred shares and debt are essentially liabilities—although the ETH treasury company can pay off debts through staking returns, those financings are still debts. Debt holders do not care about the company's success; they only care about the payment of interest.
Therefore, if you introduce conflicting motivations and different incentives when changing the capital structure, it may actually harm the company — too many convertible bonds can suppress volatility, thereby hindering the flywheel effect (volatility is the foundation of stock liquidity).
Therefore, it is difficult for you to accurately calculate the intervals for grading operations. It is also important to remember that in the next round of the crypto winter (which is inevitable), companies with the simplest balance sheets will prevail. This way, you won't be forced to finance at a discount due to payment obligations, nor will you face a natural short position created by derivative structures—leading to more short-selling triggered by coverage requirements when stock prices fall, creating a death spiral. This is why Bitmine maintains a simple structure.
If the premium of the treasury company is only 10% higher than NAV, it is difficult to rationalize the operation of the ATM - mathematically speaking, when issuing stocks at a 1.1x premium, 100% of the circulating shares need to be sold (which doubles the total share capital) to have a positive impact on each share of ETH holdings. However, if operating at a 4x premium, only 25% of the shares need to be sold to double the amount of ETH held per share. I guess Saylor's logic is in this, but my thinking is different; I believe it might be better to think more strategically.
Tom Lee: It's hard to say, but the best analogy might be the oil service industry. The simplest analogy for cryptocurrency treasury companies is oil companies. Investors can buy oil, buy oil contracts (even physical delivery), but many people are buying shares of oil companies, like ExxonMobil or Chevron, which always trade at a premium over proven reserves because these companies are actively acquiring more oil.
When capital markets become unfriendly, companies with more complex capital structures are likely to collapse. During the crypto winter, valuation disparities will be greater, and the companies with the cleanest balance sheets can acquire assets, possibly even trading at a discount below net asset value.
Tom Lee: Yes, those people from Bankless mentioned a very good point. They said that MicroStrategy is clearly leading in the Bitcoin treasury race, but in the Ethereum treasury race, there is currently no absolute frontrunner. As it stands, everyone is still able to secure funding smoothly, so it’s not yet time to consolidate.
If there is really going to be integration, I think it is more likely to happen in the Bitcoin treasury market, because Bitcoin has already experienced a significant rise (although I remain bullish and believe it can reach 1 million dollars), while Ethereum is still in an earlier stage of value realization. Therefore, the situation you just described is more likely to occur on top of Bitcoin.
Tom Lee: This is a good question, but we can only discuss it on a theoretical level. First of all, I don't think there will be a crypto winter in the near future. To be clear, we remain bullish on the market, so I don't expect a winter to occur anytime soon. Of course, at some point in the future, there will definitely be one, and by then BitMine will have several sources of cash flow:
First, from our traditional main business;
Second, from staking rewards, as staking income can be converted into fiat currency when necessary for buybacks, theoretically achieving a buyback scale of 3%, which is already quite significant.
Third, consider whether to use the capital market to support the buyback.
At that time, the companies with the cleanest balance sheets could do a lot of things. For example, using ETH as collateral for loans, the market interest rates are known, so there would be many ways to do this, but in practice, each company would be different. If the balance sheet is complex, it is basically impossible to self-protect during a discount.
Tom Lee: I think every company has its own algorithm. If a company has huge upside potential in ETH but its stock price cannot exceed NAV, then it is simply following the Beta exposure of ETH. Those companies that can achieve a premium must make Alpha choices. In other words, you can buy more ETH to gain Beta exposure, but to surpass it, you must have an Alpha strategy.
The reasons for the discount of each company may vary, including poor liquidity, high debt, complex business operations, etc., all of which can lead to a reasonable premium or discount.
Tom Lee: The work of the S&P 500 committee is confidential, but they do it well. If you look at historical data, more than 20% of the index returns every 10 years come from companies that were not included in the index a decade ago. In other words, they (the S&P 500) are actually actively selecting stocks rather than mechanically picking them according to rules.
In fact, their performance is much better than that of the Wilshire 5000, a total market index, and also better than the Russell 1000 (market cap weighted). This indicates that they are not just selecting the largest companies, but are also making thematic judgments. AI is certainly a focus, and Crypto is also very important, while they will consider reducing the weight sensitive to commodities.
Tom Lee: The S&P series is currently not possible because it requires positive net profit, which can only be achieved after we start native staking. The Russell index is quantitative, only looking at trading volume and free float market capitalization. The threshold for the Russell 1000 is about $5 billion, with restructuring occurring every June. Starting from 2026, it will change to once every six months. By this standard, BitMine has already far exceeded the threshold.
Tom Lee: I would like to summarize: we are actually witnessing a historic moment in the financial industry. Because blockchain has solved many problems, democratizing finance and breaking the gatekeeper structure that controlled resources in the past. Even when discussing universal basic income, blockchain and cryptocurrencies can provide solutions. Therefore, I believe we should not only remain optimistic about the short-term prices of Bitcoin and Ethereum, but also recognize the profound positive impact they have on society.