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Hi there. This is Tom Lee. I'm the chairman of Bitmain Immersion Technologies. And this is our chairman's message for the month of May 2026. I want to talk about crypto spring and why I believe Ethereum is the future of money. Here are some disclaimers. So, let's start with why I believe crypto spring is here.
I know that many of you believe that we're still in the fog of war and it is indeed true the US is in the midst of a conflict with Iran, but what you have to focus on is that Ethereum has now risen for 3 months consecutively. And in fact, if Ethereum closes May above 2100, that would be the third consecutive month.
As I'm highlighting here, there's never been a crypto winter where Ethereum has closed up three consecutive months in a row. In other words, the fact that we're up 3 months in a row means crypto winter is over. Another way to think of this is to look at uh software stocks and Ethereum. Both have been highly correlated to each other.
And as you can see, software stocks have risen along with Ethereum. In fact, at Fundstrat, software is now among our top sector picks as of May 1. So, that gets us to uh some facts that Ethereum is the best performing asset since the start of the Iran war. It's performing as a wartime store of value.
And here's the thing. It's been a great diversification tool since 2016. Take a look at this first column that's highlighted. Let's look at different allocations you could have done in terms of owning Ethereum on December 3rd December 31, 2016. From 0% all the way to 33%. And these are the starting dollar value.
So, if you had $100,000 for instance, and you put 5% into Ethereum, that was $5,000 invested. This highlighted column is what it would be worth today. So, your $5,000 investment would have grown to 1.5 million. In other words, if you compare that to having zero allocated to Ethereum, okay? And you look at your total portfolio today, it's 230,000 if you had no exposure to Ethereum versus 1.7 million if you had 5% allocated to Ethereum.
In other words, you would have a seven times increase total portfolio with just a 5% exposure to Ethereum. Now, another way to think of this is how much of each asset would you need to own to protect yourself against a 50% decline in the S&P 500. Okay, so this is the required hedge. You would need just 0.4% 10 years ago in Ethereum to protect yourself against a basically a wipeout in the stock market.
Gold, which is considered a store of value, you'd have to have 37% of your portfolio. So, you can see the point here. You'd want to own just a small piece of Ethereum as a source of diversification and as a hedge. Now, Ethereum does track Bitcoin, so I think you should look at the price ratio. And the current price ratio is below not only the eight-year average, but the 2021 high at 0.087.
And you've seen this chart from us before. If Bitcoin gets to 250,000, which we think is fair value in the next 12 months, and Ethereum gets to its the eight-year average of the price ratio, that's 12,000 Ethereum. That's a lot of upside from here. If it gets to the 2021 high, that's 22,000 Ethereum.
Keep in mind those are two numbers to watch. And if ETH becomes the payment rails of the future, which we believe is the case, that would imply $62,000 Ethereum. So, clearly a lot of upside from here. And Ethereum is exiting a long consolidation, something I've talked about before. And you can see this current consolidation is 5 years.
But those other consolidations resulted in pretty explosive upside moves. 227 times after the 2016 consolidation. And after the 2020 consolidation, a 54x for Ethereum. So, I think this next upside is going to be led by tokenization and a gigantic AI. So, let's talk about the future of money. Now, Elon Musk said something pretty profound recently.
He says that this future system won't use dollars as currency, just mass and energy. What he's really referring to is that compute and energy are the two scarce assets. In fact, Larry Fink of BlackRock believes that compute will actually become a new asset class, and that we'll be buying futures of compute.
Reid Hoffman, the billionaire founder of LinkedIn, said that crypto will become critical in an AI world. Okay. Well, let's think about stablecoin transactions, which we had said last year was the ChatGPT moment for crypto, and you can see stablecoin volumes now exceed Visa payments. This is according to data from Bitwise.
And Grayscale believes that the tokenized market is going to reach $300 trillion as we tokenize real estate, fixed income, equities, derivatives, commercial real estate, basically everything. What does this mean for layer one blockchains? Well, this is Ethereum, which is in pink, and the total value locked of tokenized assets.
And you can see Ethereum moves pretty closely with that tokenization. Meaning that, according to Grayscale, networks that host a large share of tokenized activities may capture a meaningful portion of economic value. In other words, if Ethereum is the leading tokenization platform, its price will go up a lot.
And uh Marc Andreessen, who's a very visionary about the future, says the grand unification of AI and crypto are age AI agents cuz they're going to need money. And we've talked about this before that there's numerous reasons why blockchains are better way for AI agents to use money. Okay. Well, let's bring this all together.
If tokenization is the future of assets and money's becoming digital and AI agents are going to use money, well, we should think about what it means for the most profitable banks in the future. Well, today JP Morgan is the most profitable bank in the world with 59 billion of net income projected this year, almost 60 billion.
And 300,000 employees. But let's mix in two new types of companies, Jane Street, which just is a trading firm, and Tether. Jane Street's on track to make $40 billion this year with 3,000 employees, 1/1000 the number of employees at JP Morgan. In fact, Jane Street in the first quarter this year is reporting about 10 billion in net income.
That means moving money, which is what Jane Street does, is starting to capture more value than the entire operations of a global bank. Again, going back to this chart, Jane Street makes more money than Bank of America, Wells Fargo, Citigroup, Morgan Stanley, and Goldman Sachs. Okay. And then let's look at Tether, which is a the largest stablecoin operator in the world.
It's going to earn about 15 billion this year with 300 employees. So, 1/1000 the number of employees of JP Morgan. These are two new types of financial institutions didn't exist 20 years ago. But keep in mind that's sort of the story that technology as it gets introduced to sectors creates disruption and it reduces the value of incumbency.
Now I'm going to highlight a bunch here. Automobiles. We don't remember any of the horse buggy makers, we only think of the new entrants. With mobile, all these old names really largely don't exist. It's mostly mobile today. In digital media, nobody really remembers names like Hearst, Viacom, NewsCorp as the giants.
They were the giants in their day, today it's more Google, Meta, and TikTok. Even more recently, cloud computing. Before our cloud computing, there were PC names, IBM, Compaq, Dell, Gateway. They've given away to Amazon, Microsoft Azure, Oracle, Google Cloud. And finally in EVs, these traditional auto makers are still around, but Tesla is far bigger.
So, markets tend to overestimate the value of incumbency. And it's really the new entrants that capture a lot of that value. Well, what does that mean? I believe in the next 10 years, half of the largest financial institutions in the world are going to be native digital companies, native digital asset companies, many of them in crypto.
And finally, let's talk about Bitmain. Bitmain's been building in the crypto winter. The first thing we did was invest in Aiko, which is an intersection of AI and identity. It's a publicly traded company, ticker ORBS. And one of their biggest assets is their holdings of Worldcoin. Worldcoin is helping verified humans to prevent networks and systems that we used to be polluted by digital bots.
I mean, take a look today, basically from everything from Polymarket to web traffic to emails, even to x.com and Reddit, are really starting to see more of the volume come from non-humans. In fact, Reddit wants to consider using base Face ID for human verification. Aiko owns a stake in OpenAI, Worldcoin, and Mr.
Beast. So, think of it as s- very similar to a company called Fundrise, ticker VCX. Whereas, Fundrise trades at six times NAV, Aiko is undervalued. The second is Bitmain launched Maven, which is the largest single staking operator in the world. Um we launched commercial service at the end of March of this year.
We have more than 14 billion of assets staked, and we're staking about 2 billion of client assets currently, including um other tokens, Hyperliquid, and Solana, and Canton. As you can see, the staking operations are gen- are an- are generating quite a lot of rewards for Bitmain. Over 300 million today, but on track to be 352 million um once we're fully staked.
We also invested into Mr. Beast. Um I've talked about that before, but he is the largest content creator in the world, but he also bought Step Financial to turn it into a financial services company. I think for Gen Z and Gen Alpha, he's going to be the Robinhood, SoFi, and Schwab combined. And of course, there's a huge wealth transfer coming for Gen Z and Gen Alpha.
We up-listed to the NYSE big board, that's a pretty big deal. And finally, we reached 4% of the Ethereum total coin supply. Bitmain was created on June 30th of 2025, and the first 1% of the Ethereum supply came in August. and as you can see the different milestones here on April 10th we reached 4%. Now we're pretty at this pace we could reach 5% very quickly.
But we actually want to slow the pace of accumulation. Um but we still expect to reach 5% of Ethereum sometime in 2026. And as far as price goes, keep in mind we're a digital asset treasury. So we're going to track the price of Ethereum but we want to outperform Ethereum. For instance, in 2025 Ethereum was up 22% from June 30th to year end, Bitmain rose 500% which means it outperformed by 48,000 basis points.
So far this year Ethereum's down 18% and Bitmain's down 15 so it's outperforming by 310 basis points. But of course if Ethereum goes up, so should your Bitmain's price. The correlation is still around 90%. So uh recall those price targets we had. 22,000 for Ethereum 62,000 for payment rail and of course 250,000 using both Joe Lubin's price target for Ethereum and Securitize's recent price target for Ethereum.
Well that would value Bitmain's shares at 500 at 22,000 1,500 at 62,000 and 5,000 per share at 250,000. So you can see quite a lot of upside. That's it for now. Thanks for listening and I'll speak to you soon.
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