Bitmine Immersion Technologies (BMNR) has caught investor attention after chairman Thomas Jong Lee signaled a slower pace of Ethereum purchases, and the company outlined an expanded US$4b share repurchase program.

Bitmine Immersion Technologies’ recent communications around moderating Ethereum purchases and expanding the share repurchase authorization come after a period of sharp swings, with the latest 90-day share price return of 11.13% contrasting with a year-to-date share price decline of 28.92% and a very large 1-year total shareholder return of 146.41%. This hints that short term momentum has cooled while longer term investors have still seen strong gains.

If you are comparing Bitmine Immersion Technologies with other crypto related opportunities, it may be worth scanning 21 cryptocurrency and blockchain stocks as a starting point for further ideas.

With BMNR stock down 28.92% year to date but still showing a very large 1 year return and trading at a discount to the US$36 analyst price target, is this pullback a fresh entry point, or is the market already pricing in future growth?

Preferred Price to Book Multiple of 1.3x: Is It Justified?

On a P/B basis, Bitmine Immersion Technologies trades at 1.3x, which has to be weighed against a recent close of $22.17 and the company’s current loss making profile.

P/B compares a company’s market value to its accounting book value, so for a business with limited earnings and early stage operations, this ratio can sometimes carry more weight than P/E. For Bitmine Immersion Technologies, the P/B of 1.3x sits against a backdrop of reported revenue of $16.712 million and a net loss of $8,689.254 million, so the market is valuing the equity materially above the current book value despite ongoing losses.

Relative to the broader US Software industry, where the average P/B is 2.8x, Bitmine Immersion Technologies trades at a much lower multiple. That gap suggests the stock is priced at a discount to many software peers on this metric, even though one of the internal checks flags BMNR as expensive compared with a narrower peer set that carries a very low, even negative, average P/B.

Result: Price-to-book of 1.3x (ABOUT RIGHT)

However, you also need to weigh the ongoing net loss of US$8,689.254 million and the heavy reliance on cryptocurrency mining and related services as key risks.

Another View: DCF Paints A Harsher Picture

While the 1.3x P/B ratio suggests Bitmine Immersion Technologies is priced in line with its balance sheet, the SWS DCF model tells a very different story. With the stock at $22.17 and our DCF value at just $0.01, the model points to a very large premium and raises the question of what outcome the market is really betting on.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Bitmine Immersion Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If you sense both excitement and caution around Bitmine Immersion Technologies but remain unsure where you stand, it may help to take a closer look at the underlying data. Consider the potential upside alongside the concerns at your own pace, then review 1 key reward and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.