Why the 6 billion yuan unrealized loss on Ethereum hasn't hurt BitMine's foundation: An insider look at the independent asset holding strategy

BitMine holds 4.24 million ETH, and at the current price of $1,990, it has an unrealized paper loss of over $6 billion. This number alone is enough to make any retail investor tremble, and the community is filled with panic voices like “Institutions can’t hold up” and “Tom Lee is doomed.” But does this really mean a bankruptcy crisis is imminent? Let’s peel back the surface and look at the underlying truths.

Why Unrealized Losses Can’t Topple Independent Holders

Surface Meaning of the Data

The original data is from January 2026, when ETH was about $2,200. With an average cost basis of $3,600–$3,900, it’s true that there’s a huge unrealized paper loss. But here’s the common misconception: equating “unrealized paper loss” with “actual loss.”

Protection Mechanisms for Independent Spot Holders

BitMine’s method of acquiring ETH determines its risk profile is completely different from leveraged traders. First, all ETH was purchased with cash or equity financing—no leverage, no futures contracts. What does this mean? It’s like buying a house at $3,600, and now the market price drops to $2,200. As long as you haven’t sold, you still own the house. The value on paper has decreased, but you won’t be forced to liquidate or lose ownership because of the price drop.

This is the biggest advantage of independent asset holders compared to leveraged players—risk resilience. The market can fall to zero; you only lose your principal, not get liquidated out.

Self-Generating Cash Flow

More importantly, BitMine isn’t sitting idly. According to the latest data, the company has staked about 2 million ETH, with an annual yield of approximately 2.81%. It may not seem like much, but let’s do the math: 2 million ETH × $1,990 × 2.81% ≈ $11 million in annual income. This stable staking income is enough to cover most of the company’s basic operating costs, enabling it to sustain itself.

In other words, even if ETH prices continue to fall, BitMine still has ongoing cash inflows and won’t face a liquidity crisis due to paper losses.

Ample Cash Reserves

The latest financial report shows BitMine still holds $682 million in cash reserves. This fund can support the company’s operations for years and even allow for strategic buy-ins or new project investments at the right time. Thanks to this independent asset allocation structure, BitMine appears especially calm in the face of a bear market.

The True Logic Behind Institutional Asset Allocation

Time Horizon Differences

Retail investors tend to view the market in days or weeks, while institutions like BitMine plan over years or even decades. The purchase of 4.24 million ETH at $3,600 wasn’t short-term speculation but based on a long-term view of Ethereum’s ecosystem—building Web3 infrastructure, improving DeFi protocols, and maturing Layer 2 scaling solutions. Within this timeframe, short-term price fluctuations are like ripples on the surface; what matters are the underlying currents.

Strategic Significance of Asset Reserves

For institutions like BitMine, ETH isn’t just an investment asset but a strategic reserve—similar to a country’s gold reserves. The value isn’t measured by this year’s or next year’s price swings but by participation in Ethereum’s long-term growth dividends. The paper loss is just an accounting figure; the real risk lies in exiting too early and missing future opportunities.

Tom Lee’s Market Outlook

Recently, BitMine’s chairman Tom Lee publicly expressed optimism about a crypto market recovery by 2026, believing ETH will return to higher levels. This view not only reflects institutional optimism but also demonstrates top investors’ rational understanding of market cycles—when panic is widespread, it’s often the best time to position for the next bull run.

Three Principles of Independent Investing from the BitMine Case

First: Distinguish Between Unrealized Losses and Actual Liquidation Risks

Long-term holders with cash flow and no leverage are the hardest to shake out of the market. If your investment approach resembles BitMine’s—buying with idle funds, maintaining ample cash reserves, and earning stable staking or dividend income—then price declines are just paper losses that won’t threaten your survival. This is the basic premise for enduring bull and bear markets.

Second: Observe Actual Institutional Actions, Not Rumors

When the market is flooded with “bankruptcy crisis” rumors, smart capital remains calm. BitMine continues staking and holds significant assets—these are concrete “bullish” actions. Instead of being scared off by rumors, it’s better to watch what institutions are actually doing—that’s the real market signal.

Third: Build an Independent Risk Management System

BitMine’s ability to withstand a $6 billion unrealized loss fundamentally comes from its independent asset structure: separating living funds from investment funds, avoiding leverage to amplify risk, maintaining sufficient cash buffers, and generating continuous cash flow. This approach applies equally to ordinary investors—use the principal you can afford to lose, choose assets that generate cash flow, and avoid leverage at all costs.

Truths and Opportunities in the Bear Market

This so-called “bankruptcy crisis” is likely just a perfect storm of misinformation. When retail investors panic and sell off over $6 billion in “losses,” those with independent asset-holding capacity—institutions and large players—are quietly accumulating. Crypto markets have always been a battlefield of perception, and what the BitMine case teaches us is: true investors don’t care about paper losses; they care about having enough cash flow and psychological resilience to wait for the cycle to turn.

In a bull market, everyone is a genius investor. Only in a bear market can you see who’s a short-sighted gambler and who’s a patient builder. BitMine and Tom Lee’s independent asset holding strategies give us the best lessons. Are you ready to think independently like the institutions?