BitMine stock analysis: what next for this future free cash flow machine?

BitMine stock price has gone sideways this month, even as Ethereum has remained above the important support level at $2,000. This consolidation could be the calm before the storm as the company continues its Ethereum purchases and staking.

BitMine stock on edge as Ethereum buying and staking continues

The BMNR stock price has moved sideways in the past few weeks, even as the company has continued its Ethereum buying spree. Data shows that the company has accumulated 417,483 coins currently worth almost $1 billion in the past 30 days.

It now holds 5,078,388 coins currently worth over $11.56 billion, making it the biggest holder of Ethereum in the world. It will soon hold more ETH than those held by its ETF investors.

The company is aiming to achieve 5% ownership this year. This is unlike Michael Saylor's Strategy, which has an open-ended Bitcoin accumulating strategy.

One notable aspect about the company’s 5% target is that it will stop the ongoing dilution since it raises cash by selling shares to buy ETH. That’s notable as each share is now being diluted by between 6 million and 9 million shares being issued each week. Once the buying stops, the ownership locks in.

The only dilution risk is when the company raises cash to invest in other companies. A good example of this is what happened when it invested in Beast Industries. As such, chances are that any new investment will be highly bullish for the company when it comes to the exit.

Meanwhile, the company continues to stake its Ethereum holdings. Eventually, the goal is to stake its 6 million coins. With a 3% yield, this staking will generate 180k coins each year, with the value being determined by Ethereum price.

An Ethereum price surge to $5000 means that the company will now start making $900 million in annual revenue. This is a high number for a company with just a handful of employees.

The company will now use these funds to either fund new acquisitions or return it to investors. It has already shared the goal of buying back shares worth $4 billion, a substantial amount for a company valued at $11 billion.

Still, the main short-term risk for the company is Ethereum, which has faced substantial rejection at $2,400. It has formed a bearish flag pattern, pointing to more downside in the near term. Still, BitMine has leveraged the concept of dollar cost averaging (DCA) to lock in a lower price. This will ensure more gain over time when Ethereum rebounds.

BMNR stock chart | Source: TradingView

The daily timeframe chart shows that the BMNR stock price has remained in a narrow range in the past few days. It has been stuck slightly above the important support level at $17.10, its lowest level on February 3rd and 26th. It has formed a double-bottom and a falling wedge.

There are signs that it is in the accumulation phase of the Wyckoff Theory. Also, the three lines of the Bollinger Bands are nearing their confluence. Therefore, these technicals suggest that the stock will have a strong rebound in the near term, potentially to the psychological level at $30.