BitMine Immersion (BMNR), the largest Ethereum-focused digital asset treasury (DAT) firm and helmed by Wall Street veteran Thomas Lee, is sitting on steep unrealized losses on its big bet on ether ETH$2,760.16.

The firm reported Friday $328 million in net income for its fiscal year ended August 31, while fully diluted earnings per share came in at $13.39. It also declared a nominal dividend of $0.01 per share and announced plans to launch a staking infrastructure product, MAVAN (Made-in America Validator Network), in early 2026.

Despite the positive headline earnings, Markus Thielen, founder of 10x Research, warned that the company, as well as other DATs, face deep structural issues.

The firm is now estimated to be sitting on over $4 billion in unrealized losses on its holdings following a 45% decline in ETH prices since the August peak. BMNR's stock price plunged 84% from its July peak, with the drawdown erasing the net asset value (NAV) premium that once fueled investor enthusiasm, Thielen noted.

Thielen argued that many Digital Asset Treasury (DAT) firms rely on complex and layered entities such as asset managers, strategic advisors and promotional figureheads with high paychecks while embedding fees that "quietly erode returns."

He pointed out that BitMine’s leadership compensation and external advisors could extract $157 million per year over 10 years through compensation and advisory contracts.

Ether's staking yield, a key revenue source on the crypto holdings, doesn't look that compelling to investors, Thielen noted. According to the CESR Composite Ether Staking Rate, ether's staking yield is currently at around 2.9%, which is far below U.S. dollar money market fund yield that's considered risk-free. Once operational costs and intermediaries are accounted for, the effective yield to shareholders is far lower, Thielen said.

"No serious institutional allocator will accept" that yield, Thielen said, especially with when ETH's "price volatility puts the underlying collateral at constant risk."

Thielen warned that DATs could trap shareholders, especially as the NAV premium collapses. "Investors find themselves trapped in the structure, unable to get out without significant damage — a true Hotel California scenario," he said.