Short seller Culper takes a position against ether, with Tom Lee’s BitMine highlighting concerns over a potential ‘death spiral’ risk.

The short-selling firm indicated that Ethereum’s native token is “impaired,” leaving treasury firm BitMine with significant losses while co-founder Vitalik Buterin is liquidating his holdings.

Thomas Lee, chairman of BitMine and CIO of Fundstrat, on the main stage during Consensus Hong Kong 2026 (David Paul Morris/Consensus)

What to know:

• Short seller Culper Research revealed a short position in ether and ETH-related stocks including BitMine.
• The firm contended that Ethereum’s Fusaka upgrade diminished the tokenomics of the second-largest cryptocurrency by collapsing fee revenues and facilitating spam transactions.
• BitMine, a significant ETH holder, has amassed 4.4 million ETH and is estimated to have approximately $7.4 billion in unrealized losses.

Short seller Culper Research is taking a position against ether (ETH) and ETH-related stocks such as BitMine (BMNR), asserting that the network’s economics have weakened following the recent network upgrade of Ethereum.

The firm stated in a report released on Thursday that the December 2025 upgrade, referred to as Fusaka, inundated the network with excessive blockspace and has “impaired ETH tokenomics.” This has led to a sharp decline in transaction fees. Since validators derive part of their earnings from these fees, the reduction has adversely affected staking yields.

This situation could initiate a negative feedback loop, the report indicated, where falling validator yields diminish staking interest and compromise network security.

The report also noted that Ethereum co-founder Vitalik Buterin sold nearly 20,000 ETH, valued at around $40 million at current market rates, this year, referencing data from blockchain analyst Lookonchain.

“Vitalik is selling, while bulls like Tom Lee are unaware of ETH’s new reality,” the report stated. “We align with Vitalik.”

The report counters optimistic assertions from Lee, chairman of Ethereum-focused treasury firm BitMine, who has cited rising transaction counts and active addresses as indicators of improved network fundamentals.

Culper argued that these metrics are deceptive. Its analysis suggested that a considerable portion of the activity surge is due to address poisoning attacks, a scam strategy where attackers send small transactions to mislead users into copying harmful wallet addresses. Culper estimated that Ethereum fees have decreased by approximately 90% since the upgrade.

“According to Lee’s own reasoning, if utility is NOT increasing, then ETH is in a death spiral,” the report remarked. “This is precisely what we believe is occurring.”

The short thesis also focused on BitMine (BMNR), one of the largest corporate purchasers of ether.

Since July, the company has acquired around 4.4 million ETH as part of its treasury strategy. With ether prices significantly lower than recent peaks, those holdings are estimated to be 45% underwater, resulting in BitMine having roughly $7.4 billion in unrealized losses, according to DropsTab data.

BitMine did not respond to a request for comment by the time of publication.

Read more: Vitalik Buterin reveals his bold new plan to fix Ethereum’s scaling problem