This article is from: Medici Network

Translation | Odaily Planet Daily (@OdailyChina); Translator | Azuma (@azuma_eth)

Editor's Note: What is the strongest buying force behind ETH's recent surge? The answer undoubtedly lies with the ETH treasury company. With the continuous accumulation by BitMine (BMNR) and Sharplink Gaming (SBET), the influence over ETH has quietly shifted — for details, refer to “Revealing the Two Key Players Behind ETH's Recent Surge: Tom Lee vs. Joseph Rubin.”

Strategic ETH Reserve data shows that as of September 4, Beijing time, BitMine's ETH holdings have reached 1.87 million coins, valued at approximately $8.16 billion. Tom Lee, the helm of BitMine, has already become the largest whale with the most influence in the current Ethereum ecosystem.

On the evening of September 3, Tom Lee participated in an interview on the Level Up podcast under Medici Network. In the conversation, Tom Lee discussed ETH's positioning in the global financial sector, the rise of BitMine as a leader in ETH treasury, and the macro environment surrounding digital assets. Tom Lee also shared his views on the long-term potential of cryptocurrencies, the vision of decentralization, and how BitMine plans to further increase its reserve scale.

Below is the original content of the interview, translated by Odaily Planet Daily — for the sake of reading fluency, some content has been slightly condensed.

• Host: Can you briefly share your story? How did you get into the cryptocurrency market? (In introducing Tom Lee, the host referred to him as "the best-looking man on Wall Street" in addition to his regular title.)

Tom Lee: In short, after graduating from university (at Wharton), my entire career has basically revolved around one job, which is market research. 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 lessons. Wireless communication was still in its infancy back then — there were only 37 million mobile phones globally, and today there are nearly 8 billion, with growth being exponential. But what surprised me was that many clients were very skeptical about wireless technology at the time — they viewed the core business of the telecom industry as long-distance and local calls, and mobile phones were just an "upgraded wireless phone" that might become free in the future.

So I realized: 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 initial intention of creating Wall Street's first company aimed at "democratizing institutional research" — that is, opening up research originally intended for hedge funds and large asset managers to a broader public. We wanted to make the research services that were previously provided to hedge funds and large institutions available to the public.

Then around 2017, I started noticing news that Bitcoin had surpassed $1,000. This reminded me of the discussions we had in the JPMorgan forex team about Bitcoin when its price was still below $100, focusing on whether this digital currency could be recognized as a form of currency.

However, at JPMorgan, the attitude was very negative; people thought Bitcoin was just a tool for drug dealers and smugglers. But in my 20-year career, I had never seen an asset rise from below $100 to $1,000, with a market cap exceeding $10 billion. This is definitely not something to be ignored; I had to study it.

So we began our research. Although I couldn't fully understand why "proof-of-work blockchain" could become a store of value at that time, I found that just two variables could explain over 90% of Bitcoin's price increase from 2010 to 2017: the number of wallets and the activity level of each wallet.

Based on these two variables, we could even model and project Bitcoin's potential future trends. This was my first real "journey" into the crypto space. So, when Bitcoin's price was still below $1,000, we published our first white paper. We proposed that if someone viewed Bitcoin as a substitute for gold, and it captured just 5% of the gold market, then Bitcoin's fair price would be $25,000. This was our prediction for Bitcoin's price in 2022, and indeed, by 2022, Bitcoin's price was around $25,000.

• Host: You just talked about BTC, but you're also doing some interesting things with ETH. Can we talk about the macro opportunities for ETH?

Tom Lee: For a long time, from around 2017 to 2025, our core view in the crypto space has been that — Bitcoin occupies a very clear position in many people's portfolios because it has been validated in terms of scale and stability, and more importantly, it can serve as a store of value.

When we think about how investors should allocate in crypto assets beyond Bitcoin, there are many projects in the market — such as Solana, Sui, and various projects you often write about. But starting this year, we have seriously re-evaluated Ethereum.

The reason is: I believe the regulatory environment in the U.S. is moving in a favorable direction this year, which is causing Wall Street to take cryptocurrencies and blockchain more seriously. Of course, the real "killer application" or the so-called ChatGPT moment is actually stablecoins and Circle's IPO, followed by the "Genius" Act and the SEC's Project Crypto plan.

I believe there are many favorable factors for ETH, but the main point is — when we observe the asset tokenization projects that Wall Street is advancing, whether it's the dollar or other assets, the vast majority are being conducted on Ethereum.

Moreover, more importantly, I think people need to take a step back and look: What is happening on Wall Street in 2025 is very similar to the historical moment of 1971. In 1971, the U.S. dollar decoupled from gold and abandoned the gold standard. At that time, gold did benefit, and many people bought gold, but the real core 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 circulation and payment "tracks" for dollar transactions. Therefore, the real winners were on Wall Street.

By 2025, the innovations brought by blockchain are solving a lot of problems, and Wall Street is migrating to the crypto "track," which, in my view, is ETH's "1971 moment." This will bring huge opportunities to migrate a large number of assets and transactions onto the blockchain. Ethereum may not be the only winner, but it will be one of the main winners.

From the perspective of institutional adoption, I hear a lot of related discussions. BTC has already become very institutionalized. When I meet with investors, they know how to build models and think about BTC's future value. So, BTC has already entered many portfolios. In contrast, ETH's holding rate is still very low, more like BTC in 2017.

I believe that ETH is not yet truly regarded as an "institutional asset," so it is still in a very early stage, which is also why I think ETH has greater opportunities.

• Host: I know you have set a target price for Ethereum, around $60,000. How did you come up with this prediction?

Tom Lee: Yes, that's correct. But I must clarify, (the $60,000) is not a short-term target. So don't come at me on December 31 saying "it hasn't risen that much," this is not a prediction that will be realized next week.

In fact, what I referenced was an analysis we did for ETH, which was completed by Mosaics and some other researchers. Their thinking was to treat the present as a turning point similar to 1971. They considered Ethereum's value from two perspectives: one as a payment track, and the other as Ethereum capturing a portion of the payment market share. I believe these two concepts can be superimposed.

Their hypothesis was that if you look at the market covered by the banking system and assume that half of it will migrate 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 30x price-to-earnings ratio, you would arrive at an estimated valuation of about $3 trillion. Adding these two parts together, Ethereum's fair valuation should be around $60,000, which means there is about 18 times growth potential from now.

• Host: Recently, the positive outlook for ETH has largely been related to the continuous buying by digital asset treasury companies. As the chairman of BitMine, how do you think investors should view different investment avenues, such as choosing between ETFs, spot purchases, and treasury company stocks?

Tom Lee: First of all, if someone wants to gain exposure to ETH through an ETF, that's perfectly fine because it allows you to invest directly in ETH without significant price differences, just like a BTC ETF gives you direct exposure to BTC.

But if you look at the treasury companies for BTC, MicroStrategy's scale is larger than the largest BTC ETF. This means that more investors are willing to indirectly hold BTC through MicroStrategy rather than through an ETF. The reason is simple: treasury companies do not just provide you with 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 around $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, an increase of about 11 times. This shows that MicroStrategy has successfully increased the amount of BTC held per share, while the BTC ETF remained unchanged during this period.

In other words, over five years, an ETF might give you an 11-fold return, but MicroStrategy, through its treasury strategy, can allow investors to earn even more. They leverage the liquidity and volatility of the stock to continuously increase the BTC holdings per share. Michael Saylor's strategy reflects this, going from an initial BTC value of $1 or $2 per share to today’s corresponding value of $227, which is a significant increase.

• Host: You just mentioned that traditional investors' interest in Ethereum is increasing. I'm curious, over the past few months, how has the attitude of some non-crypto-native institutional clients changed when discussing treasury companies?

Tom Lee: To be honest, most people are quite skeptical when it comes to crypto treasuries. There are indeed many investors in MicroStrategy who have made good profits, but even so, its holders are not as widespread as you might think, because there are still a large number of institutions that do not believe in cryptocurrencies at all. For example, a recent survey by Bank of America showed that 75% of institutional investors have zero exposure to crypto. This means that three-quarters of them have never touched crypto assets. So when they see treasury companies, their first reaction is, "It's better to just buy tokens directly."

Therefore, we spend a lot of time in meetings educating them. Using BitMine's data as an example, the difference is that treasury companies can help you increase the amount of ETH corresponding to each share. For instance, when we transitioned to an ETH treasury on July 8, each share corresponded to only $4 of ETH, but by the update on July 27, each share corresponded to $23 of ETH, nearly a 6-fold increase 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 clearly BitMine is moving the fastest. How did you achieve this?

Tom Lee: I think MicroStrategy provides a great template. The first BTC treasury company was actually Overstock, but it didn't really convince investors, and its stock price did not benefit. Saylor was the first to do this in a more scalable and systematic way, which has indeed inspired us. So our strategy at BitMine is to maintain an extremely clear and simple path, relying entirely on common stock for operations, avoiding complex derivative structures, and making it easy for investors to understand at a glance. In the future, we may consider strategies that utilize volatility or market cap, but the first step is to have a clear strategy that convinces shareholders.

Why is this important? Because investors need to believe that what they are buying is not just ETH, but a long-term macro trading opportunity. Just like Palantir can achieve a premium valuation, not only because of its product but also because shareholders feel they own "something meaningful." What we need to do is 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 said he would more aggressively use ATMs (issuing new shares in the open market) within a premium range of 2.5 to 4 times. I believe you have been more aggressive in increasing net asset value (NAV) through ATMs than any other treasury company, 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 multiple? Like Saylor said, he is at one extreme, believing that anything below 4 times is not worth operating aggressively. What are your thoughts?

Tom Lee: I think there is a strange mathematical problem here.

Theoretically, every financial instrument requires a certain trade-off — this might be a bit technical for the audience — common stock is actually a great financing tool because it gives everyone an equal opportunity for upside without conflicts of interest — both new and old shareholders are betting on the company's future success.

But when you finance with convertible bonds, the situation is different; buyers will not only focus on the stock price but also care about capturing volatility, and they may even hedge to eliminate volatility. Preferred stock and debt are essentially liabilities — although ETH treasury companies can pay off debts with staking rewards, that financing is still debt. Debt holders do not care about the company's success; they only care about interest payments.

So, if you introduce conflicting motives and different incentives when changing the capital structure, it can actually harm the company — too many convertible bonds can suppress volatility, thereby hindering the flywheel effect (volatility is the basis of stock liquidity).

Therefore, it is difficult to precisely calculate the range for graded operations. Another thing to keep in mind is — in the next crypto winter (which is inevitable), companies with the cleanest balance sheets will win. This way, you won't be forced to sell at a discount to meet payment obligations, nor will you have a natural short position due to derivative structures — when stock prices fall, coverage requirements can trigger more shorting, creating a death spiral. This is why BitMine maintains a simple structure.

If a treasury company's premium is only 10% above NAV, it is difficult to justify ATM operations — mathematically, issuing shares at a 1.1x premium requires selling 100% of the circulating shares (doubling the total share capital) to have a positive impact on each share's ETH holding, but if operating at a 4x premium, only 25% of shares need to be sold to double the ETH holdings per share. I guess Saylor's logic is in this, but my thinking is different; I believe a more strategic approach might be better.

• Host: You mentioned the inevitability of down cycles. 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 crypto treasury companies is oil companies; investors can buy oil, buy oil contracts (or even physical delivery), but many people are buying stocks of oil companies, like ExxonMobil or Chevron, which always trade at a premium to proven reserves because these companies are actively acquiring more oil.

When capital markets become unfriendly, companies with more complex capital structures will collapse. In a crypto winter, valuation differences will be greater, and companies with the cleanest balance sheets can acquire assets, and they may even trade at discounts below net asset value.

• Host: Are you suggesting that there will be some mergers/integrations among treasury companies?

Tom Lee: Yes, those people at Bankless mentioned a good point. They said that MicroStrategy is clearly leading the pack in the BTC treasury space, but in the Ethereum treasury space, there is currently no absolute leader. As it stands, everyone can still secure funding smoothly, so it’s not yet time for necessary integrations.

If there is going to be integration, I think it is more likely to happen in the Bitcoin treasury market because Bitcoin has already seen a significant increase (although I remain bullish, believing it can rise to $1 million), while Ethereum is still in an earlier stage of realizing its value. So, I think the situation you just described is more likely to happen in Bitcoin.

• Host: You mentioned the importance of maintaining a clean balance sheet. In a crypto winter, if a company's stock price is discounted, would you consider buying back shares? Would it be through issuing debt, or would you keep additional cash reserves outside of your ETH positions?

Tom Lee: That's a good question, but we can only discuss it at a theoretical level. First of all, I don't believe a crypto winter will occur in the near future. To be clear, we remain bullish on the market, so I do not expect a winter anytime soon. Of course, at some point in the future, there will definitely be one, and at that time, BitMine will have several sources of cash flow:

First, from our traditional core business;

Second, from staking rewards, as staking income can be converted into fiat currency when necessary for buybacks, theoretically even achieving a 3% buyback scale, which is already quite significant;

Third, considering whether to use the capital markets to support buybacks.

At that time, companies with the cleanest balance sheets will be able to do a lot. For example, using ETH as collateral for loans, where market interest rates are known, so there will be many ways, but practically every company will be different. If the balance sheet is complex, it is basically impossible to self-protect when discounted.

• Host: To keep BitMine's stock price above its NAV, would you consider mergers and acquisitions? Because that would add value from the perspective of each ETH share. At what discount level do you think acquisitions would make sense?

Tom Lee: I think every company has its own algorithm. If a company has significant upside potential in ETH but its stock price is still below 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 each company's discount may also differ; it could be due to poor liquidity, high debt, complex business operations, etc., all of which can lead to reasonable premiums or discounts.

• Host: Changing the topic, although it is 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 a great job. If you look at historical data, every 10 years, more than 20% of the returns in the index come from companies that were not included in the index ten years ago. In other words, they (the S&P 500) are actually actively stock-picking rather than mechanically selecting based on rules.

In fact, their performance is much better than that of broad market indices like the Wilshire 5000, and it also outperforms the Russell 1000 (market cap weighted). This indicates that they are not just selecting the largest companies but are making thematic judgments. AI is certainly a focus, and crypto is also important, while they will consider reducing weights sensitive to commodities.

• Host: Speaking of indices, BitMine is growing rapidly. Is there a possibility of being included in some indices?

Tom Lee: The S&P series is currently not possible because it requires positive net profits, which we can only achieve after we start native staking. The Russell index is quantitative and only looks at trading volume and free float market cap. The threshold for the Russell 1000 is about $5 billion, and the restructuring occurs every June. Starting in 2026, it will change to every six months. By this standard, BitMine has already far exceeded the threshold.

• Host: I think we have covered a lot in 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 want to summarize: we are actually witnessing a historic moment in the financial industry. Because blockchain solves many problems, democratizing finance and breaking down the gatekeeper structure that has controlled resources in the past. Even in discussions about universal basic income, blockchain and cryptocurrencies can provide solutions. So 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 will have on society.

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