Digital Asset Treasuries (DATs) have become one of the most prominent features of the current cryptocurrency bull market. DATs are companies that acquire a stock of a particular cryptocurrency, from Bitcoin to Dogecoin, and seek to operate a publicly traded vehicle that provides sales exposure to these assets in the form of shares.
However, with the number of projects increasing, critics have warned that digital asset treasuries, or DATs, could be the next collapse in this rollercoaster sector. In the most recent episode of Fortune’s “Crypto Playbook” podcast, Tom Lee, longtime analyst and president of BitMine, a leading DAT, said the bubble may have already burst.
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Lee first became aware of Bitcoin while serving as chief strategist at JPMorgan in 2012, starting his own research firm, Fundstrat, a few years later and building a reputation as an outspoken Bitcoin bull when much of Wall Street was still skeptical.
In June, he became a crypto executive himself, joining a little-known publicly traded Bitcoin mining company called BitMine, which was looking to reposition itself to become the largest institutional holder of Ethereum.
Software CEO Michael Saylor pioneered the approach with his company, MicroStrategy, which began accumulating large stocks of Bitcoin in 2020, quickly becoming a way for investors to access the volatile cryptocurrency through a publicly traded vehicle, long before the approval of exchange-traded funds (ETFs). BitMine’s idea was to do the same, but for Ethereum, the second largest cryptocurrency.
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While Ethereum has struggled in recent years amid the proliferation of other blockchains and its own technical challenges, Lee argued that it is still “Wall Street’s blockchain,” especially as financial firms explore implementing stablecoins and different tokenized assets, many of them native to Ethereum.
BitMine, whose market capitalization is over $15 billion, holds more than 3 million Ethereum tokens, or about 2.5% of the total supply, although Lee’s goal is to acquire 5%.
While investors have more options for purchasing major cryptocurrencies than when Saylor began accumulating Bitcoin for MicroStrategy, Lee argues that BitMine still offers advantages, from reaping rewards from staking (guarantee blocks) until it is included in the main stock indices.
“We are essentially a liaison between how Wall Street views future Ethereum upgrades,” said Lee.
This does not mean that digital asset treasury firms as a broader asset class will prove successful, especially as more are launched to hold different types of cryptocurrencies, including so-called alt coins like Sam Altman’s Worldcoin.
Lee pointed out that many DATs are trading below their net asset value, or the value of their crypto holdings, while an increasing number are released to the market. “If this isn’t already a bubble bursting,” Lee asked, “what is?”
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