Tom Lee: Strategic Ethereum Accumulation and BitMine at KBW2025

All right. All right. We're finally into what you've all been waiting for. Uh Tom Lee, ladies and gentlemen. Tom Lee, ladies and gentlemen.

[cheering] [applause]

I'm I'm excited for this one. I think you all are excited for this one based off that, too. Um I've known Tom for a while coming from the traditional finance world. So, you might know him as the man who runs things at Fundstrat. I know him as one of the most correct people in market history.

Uh and now, the man who is leading the way at Bitmain Emerging Technologies. Tom, thank you so much for being here, man. Thanks for having me. Yeah, this is exciting because obviously a lot of people from traditional markets know you, but now the Ethereum community knows and loves you. I want to ask you because it's been night and day.

I think last time we had you on Coin Desk, it was less than 90 days since you announced what you were doing with Bitmain, now the largest ETH dat. What's it been like for you personally to to cross $10 billion in 90 days? Um yeah, in fact, it's been uh 10 weeks. So, it's been uh less than 90 days. Um but it's been uh you know, a a lot of work um because, you know, Bitmain is on a mission to uh become one of the largest crypto treasuries in the world, but also have a beneficial impact on Ethereum.

So, uh there's a lot of strategic planning that we do constantly and a lot of thinking through markets and communication. So, it's been busy, but it's been a lot of fun. Was anybody really confused when you announced it and jumped into cuz you've people might not know this, but you have been publishing research on crypto for years. So, it's not new for me to see this happen, but maybe some people got surprised. Yeah, I I wouldn't blame anyone being surprised because uh we've been writing about Bitcoin since 2017 when it was under a thousand and at that time we had we posited that institutional investors would want to own Bitcoin because of its status as digital gold and today that's really the mainstream narrative.

Um but this year myself and Mozaix who helped me engineer this Bitmain transformation uh we started to see the possibility that Ethereum was entering a supercycle, you know, something that would last 10 to 15 years and uh if that was true we'd want to have a role in actually helping sort of guide Ethereum and traditional Wall Street onto Ethereum and that's why we did the Bitmain strategy. And you have the stated goal of the alchemy of 5% or acquiring 5% of all the outstanding ETH. You guys are now above 2% of all of the outstanding ETH. The question is what about Ethereum was it that kind of made you so convinced that this is where I know I know you've talked about stablecoins being the chat GPT moment of Ethereum but what was it that jumped out? Uh in our view Ethereum probably is a chain that had become underestimated.

You know, it made its all-time high five years ago. Uh so when we started the treasury strategy Ethereum was around 1300 and and its all-time high was around 4800. But that was a a case in our minds where Ethereum's fundamental story was much stronger cuz number one it is the second largest blockchain, it's the largest smart contract platform. It has a huge community of developers that in my opinion are really benevolent focused. You know, Ethereum is trying to improve the world.

Um but I think people thought of it as uh less exciting than other platforms. Um but then along comes not only stablecoins which are you know, we call the chat GPT moment for crypto, but it's really the realization that this current administration in the US, the White House and Congress are really becoming pro-crypto, and Wall Street itself is embracing blockchains. And the blockchain they're doing most of the work on is Ethereum. So, uh when I look at that combined with AI, and you know, tokenized uh agentic AI and robots are really going to create the need for a like a token economy for robots. A lot of that will happen on Ethereum.

In fact, President Trump today just talked about how he needs proof of human um to protect us, and a lot of that work is going to be done on Ethereum. So, you have two drivers for what we think are a super cycle. So, to us at 1,300 Ethereum was kind of like a massive risk reward. Yeah, we're going to get into more price targets at the end, but I I I guess on the stable coin pieces, we've seen other stable coin-centric chains launch. I'm just curious if that's changed your thinking around the opportunity for ETH since now we've got, you know, Stripe working on their own thing.

You've got Tempo. You We just heard from USDC. There There's just a lot kind of eating into that share. I don't know if that's the way that you see it or not. Um well, it's a big market.

I mean, stable coins are just tokenized US dollars right now. Um but we're going to be seeing tokenized equities and credit and real estate and loyalty points and intellectual property. You know, intellectual property is the largest component of US CapEx. That should be uh on chain. So, is it a $400 trillion market, and stable coins are 280 billion right now?

I think that there's room for plenty of blockchains to benefit. Um but I do think the idea of a fat protocol is important for people to keep in mind. That's what Union Square Ventures first wrote about. I don't know if you guys remember from 2011 or but as stable coins are created on a layer one, that layer one captures the value. It that payment rail concept is the exact same reason banks you know, as you put a deposit in the the value the company actually equals your deposits cuz they make a loan with that deposit.

So I I think in in many ways there'll be room for for many blockchains, but the majority of this is is taking place on Ethereum.

I'm glad you mentioned that, too, cuz I think it's something that people overlook when it comes to choosing a chain. I myself when we're tokenizing, so you're talking about equity, we're working on tokenizing the equity value of creators, essentially tokenize creator offerings, and we did that on Ethereum because there are trust assumptions in terms of what Ethereum's done, the hard work of decentralizing over a few years. Now we're seeing a lot of banks, institutions, you said Wall Street has to make the same calls, and I'm curious to get your take on what that looks like in terms of the tradeoffs in choosing some other chain versus Ethereum and what you're seeing. Yes, and I'm not going to throw shade at any other layer ones because I do think there's room for multiple, but Ethereum is a truly neutral chain. I don't think anyone ever feels that someone's got a fat finger tilting it in their favor.

If you think about how Wall Street operates they will only want it to and operate on a neutral chain. If one of the banks creates their own layer one calling it, I don't know, you know, too big to fail bank layer one blockchain, no one is going to feel that's a neutral blockchain because that's going to always tilt it in their favor. I mean, that's just how Wall Street operates today. You know, if a bank is the axe trading a bond, they have perfect information and they use that against anyone else that's trades it. So, I think it's important for uh Wall Street to find a public blockchain that's neutral.

And today, the biggest one is Ethereum. And I think that's probably the driving force. We're going to get into Bitmain itself in a second, but I think that's the driving force of of why you made the jump into it. But, I do want to talk about let's get into assuaging some fears around DATs because it has happened so quickly, so fast, and a lot of money has poured into these. I'm kind of curious to get your take in in terms of consolidation.

Uh I was chatting with Cosmo Jiang from Pantera, one of your guys's backers to a Bitmain, kind of talking about the idea that there might be only three DATs or so per like coin that might exist. And you might have some buying other DATs that are trading below MNAV. I'm kind of curious if you see it the same way that eventually there might be consolidation, and it's all about who's the face of these things? Who's the Tom Lee that's going to be better than everybody else at doing it? So, how do you see the consolidation shaping up?

Uh yes, Pantera uh is one of the largest investors in Bitmain. Um and they've been a great partner. So, uh and and and I do consult with Cosmo periodically. There's a lot of good information he has that he shares. Um you know, I think that if you look at DATs, um it's like this it's no different than looking at any other business, which is that um whether you're looking at a social media or chips or gaming or media or clothing, consumers and investors probably only want to have two to three things that they consider uh differentiated stories.

Um and so, I think in in the digital asset treasury world, that's going to be pretty true by token. So, in Bitcoin, MicroStrategy by a country mile uh is a differentiated story. I mean, they're so big now. They have 3% of Bitcoin, but you know, they they'll always, in my opinion, have a NAV premium because um it's got a sovereign put. I mean, the day the US is serious about getting a million Bitcoin or you know, another country, um they're going to buy MicroStrategy.

And in Ethereum, uh I think there is a a lot of room for differentiation because Ethereum when it generates a native staking yield, and you can also um invest in DeFi, or also create payment rails around Ethereum. So, I think there's room for more than one. Like, you don't have to just say there's going to be one survivor, but I think executing is really important. I mean, there's a lot of digital asset treasuries out there, and they're not all created equally. No, they're certainly not, and I think that that's also kind of interesting to see, too.

It was just announced uh yesterday, I think, that Strive uh is is announcing plans to buy Silver Scientific, which was trading below uh NAV. And I think that that just kind of speaks It's interesting because the shares are still also trading at a discount to where even that deal should close. I don't know if that kind of says something about kind of how the market's still getting used to trying to price these things out. Yes, I think part of it is the the digital asset treasure world uh bridges two worlds. One is crypto because it don't it it invests and buys a token.

And uh so, you have to be able to speak the language of the crypto economy. Um but then, the other world that treasuries sit in is public equities. And remember, there's 5,700 stocks out there. 5,700. I mean, like So, just because like a company does something, doesn't mean the market cares.

Uh if you look at um the stock market today, the top 30 most traded stocks are literally the only stocks that Robinhood cares about or Schwab or even JP Morgan. Trading probably only cares about 10 stocks. And Goldman's desk only cares about 10 stocks. Institutional investors care about sector exposure, but they always buy the leader. So, uh you know MicroStrategy is one of the most liquid stocks in the market today.

Trades 3 billion a day. Fortunately, Bitmain is one of the most liquid stocks today. Um, it trades about $3 billion a day. It trades about as much um every day as JP Morgan or Arista Networks or Google. We're really one of the most liquid names.

And then I learned that in Korea, we're top one, two, or three in terms of trading volume. So, I think that unless you're going to break into the top 30 as a stock institutions may not pay attention because institutions want to have volatility access to hedging through option chains. And Bitmain's a top 10 chain. Um and so if if you're not in that zip code institutions aren't going to pay attention. I think everything you just described too though, I think speaks to some people are saying, "Oh, Tom Lee might be the the the sailor of Ethereum."

But I think that kind of sets it a little bit lower than where even your head's probably trying to go or it's there's there's arbitrage and there's alchemy to be had here. And it's and it's more market-based than crypto-based, I think. Uh, that's right. So, Michael Saylor is a very good friend of mine. Um, in fact, you know, I spent a lot of time explaining to him and thinking around Ethereum and Bitcoin.

And I I think we agree Bitcoin and Ethereum, first of all, are friends. We don't compete. Um, but that our strategy is very different. You know, I'm not trying to I'm not competing. Bitmain is not trying to get an institution to buy us over MicroStrategy.

In fact, we think an institution that owns MicroStrategy also has to own Bitmain because we are different parts of the crypto economy. Ethereum to me is the new Wall Street. You know, in 1971, the dollar went off the gold standard. Okay? Now, everyone thought in 1971 the play was gold.

But actually in 1971, the dollar became synthetic. It no longer was backed by anything. And that's when Wall Street stepped in and said, "Okay, we got to make sure that the euro or well, you're going to get the German frank or whatever the German mark or the French franc doesn't become dominant." So, Wall Street built products to make sure everyone used a synthetic dollar. Wall Street was the big play in 1971.

In 2025, we're making everything synthetic. We're starting with tokenizing the dollar. And then, as you know, Wall Street's going to tokenize equities and everything I just listed, massive opportunity. Ethereum is in a super cycle because of that, but Bitmain can play a role cuz it can become a payment rails. It could become almost a bank.

Uh it can help as by owning, you know, the largest holder of Ethereum today, it's a kingmaker on the DeFi. Uh we were doing moonshots. We invested $20 million into 8 co, which is investing in the Worldcoin. And that already, in just less than 10 days, has already returned more than 10 times our investment. So, I think we are becoming an a financial infrastructure company.

I think kingmaker's a a good phrase to use for that, too. And I also think it's important to distinguish. I don't know if you think similarly about other Ethereum dApps, too, cuz there have There've others. I think F2 Nexus came out and said they want get to 10%. I don't know if they use 10% Alchemy, but I don't know how you react to things like that cuz that's not the only thing here.

It's more than just like, "Hey, we're going to own X% of ETH." That's right. Uh I mean, I think that it's going to be important for other Ethereum treasuries to be differentiated. I I do think there's room for more than one, but the market is also picking winners and losers. Bitmain trades $3 billion a day.

MicroStrategy trades 3.4 billion dollars a day. I think the two of us represent 95% of all trading volume in the Dats. So, if you look at the hundreds of Dats, the two of us are 90% of the trading volume. That means institutions really only want to buy us.

Um you know, in terms of total market cap, uh you know, we we are a basically a large cap stock now. So, we're going to be part of a lot of these major indices when they rebalance,

Yeah. which means we'll have passive flows. That really helped MicroStrategy, too, and that's actually what sustains valuation premiums. Because now you have someone who's buying every day. We've gone deep into the weeds on the market side.

I do want to back up and ask one question around the idea of it kind of being like a a trade-off. I I wonder if you agree that it's kind of like a Laffer curve where since ETH is all about decentralization, if there does start to be diminishing returns if someone controls too much of ETH maybe if it ever gets to that point, if you think that's one thing. I I've actually spoken to some researchers about this. Like, what's too much concentration? Um 5% is where you get a power law benefit.

Not that um you know, it starts to break down. Um these same researchers have actually told us that it's pretty safe to go to 10% of Ethereum. And uh as you know, Ethereum no one controls it. I mean, if some entity owned 10% uh and it of course that entity is a permanent capital vehicle and is going to be staking and doesn't want to get slashed, you know, so they're going to make sure they're validating properly. I'd actually think it really secures the network because now all of a sudden you you know a a D by the way is completely decentralized, right?

It's owned by shareholders. Like Bitmain has 270,000 shareholders. That's actually who controls Bitmain. It's not centralized. I mean it is actually I'd argue a way to ensure perpetual decentralization because now the shareholders own Bitmain they control how the stock does and you know, and if the stock's valuation gets weak, then the D loses its ability to you know, raise capital.

So it's truly decentralized.

The aligned interest of a kingmaker as well, I think is is important to maybe maybe call it that. Uh to wrap up though, since we they only gave us this much time. I want to go longer with you Tom, but I guess we can just do it on Coinage whenever you have time. Um but I do think it is interesting to get into your price targets. Everyone loves a good Tom Lee price target.

I will say no matter where I've worked it blows up in a good way. So talk to me about where you get to. I think last time it was 10K, now you've already up that I think, but how do you see this all playing out? Where does ETH go even at the end of the year? Um well, a lot of it starts with uh our views on crypto and you know, I'm still bullish on Bitcoin.

In the fourth quarter seasonally Bitcoin strong but now we have the Fed flipping dovish after being essentially hawkish all year. That's a tailwind for Bitcoin. So I think Bitcoin gets to 200 to 250,000 by the end of the year. And that aligns with Mark Newton's technical targets. Ethereum as a price ratio to Bitcoin should recover to its prior let's say either average or at least 5-year highs, okay?

Using a $250,000 Bitcoin, that implies somewhere between 10 and 12,000 for Ethereum by the end of the year. But uh I do think Ethereum is going to exceed those prior highs, and that's why I think when we get to 12, 15,000, that's what you call you know, real price discovery, but I don't think that would be the ceiling for Ethereum. Well, I mean, I guess the the last question would be around if it's not the ceiling. We just celebrated 10 years of Ethereum. Looking out 5 years, you've been right, like I said at the open of this, in kind of the most panicked of times, whether it was COVID or when tariffs hit earlier this year.

You've always kind of said, "Hey, cooler heads will prevail." I'm not saying that it's going to be straight shot in the next 5 years, but how do you kind of see it getting there? Yeah, some perspective. You know, in 2017, Bitcoin was under 1,000, and we thought it would get to 25,000 by 2022, but could get to 100,000 a little bit later. Of course, you know, 8 years later, Bitcoin's over 100,000.

Uh to us, an intermediate level for Ethereum is matching Bitcoin's network value. So, I think a couple years from now, so that would be 60,000 ETH. I think that's a good place to leave this one, maybe. 60,000 Again, it's not just the price targets. I think you being now involved in this, I'll just say cuz I do remember when you made those price calls earlier.

Tom Lee, you you bring a lot to the space, and I appreciate you taking time here. One of the best people I've gotten to know over my career in 10 years doing this, but excited to have you now in the the camp. Tom Lee, ladies and gentlemen. Woo!

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