Bitmine Reports $5.4B Unrealized ETH Loss and Ongoing Internal Control Flaws

Bitmine Immersion Technologies disclosed in its annual Form 10-K filing that its internal financial reporting controls remained ineffective for a second consecutive year as its digital asset portfolio finished fiscal 2026 sharply below cost ¹. The SEC filing, submitted on Nov. 10, covers the 12 months ending Aug. 31, 2026 ¹.

The ether treasury firm chaired by Tom Lee held 5,901,837 $ETH at the close of its fiscal year, carrying a fair value of $14.56 billion against a cost basis of $19.95 billion—an unrealized markdown of roughly $5.4 billion ¹. Driven primarily by these markdowns, Bitmine posted an annual net loss of $6.31 billion, compared to net income of $348.6 million in the prior fiscal year ¹. The company also booked a $143.7 million net loss on $ETH-referenced derivative positions, with no contracts open at year-end ¹. Meanwhile, annual revenue increased to $124.8 million from $6.1 million, with staking and validation activities accounting for approximately 97% of the total ¹. At the time of writing, ETH traded at $2,059.

Governance and Staking Revisions

Management previously recognized material weaknesses spanning all five components of the COSO internal-control framework as of Aug. 31, 2025 ¹. Despite implementing an enterprise resource planning system, hiring external consultants, adding accounting staff, and hiring KPMG to replace auditor Bush & Associates in April, Bitmine concluded that the deficiencies persisted because newly deployed controls lacked sufficient operating history ¹.

Operational structures also shifted following the fiscal year-end ¹. Bitmine terminated its management services agreement with Ethereum Tower LLC on Sept. 3 without incurring a breakup fee ¹. The following day, Bitmine's staking unit, MAVAN, entered a 10-year advisory contract with affiliate American Validator LLC, agreeing to pay 1.5% of staking rewards generated from the company's staked assets ¹. A subsequent update on Nov. 9 showed holdings expanding to 6,070,092 $ETH, representing 4.97% of the circulating supply as the company approaches its stated 5% threshold, following earlier acquisitions tracked by Basis Desk ¹. The firm is shifting its fiscal year-end to Dec. 31 and plans to file a transition report spanning Sept. 1 through Dec. 31, 2026 ¹.