Short seller Culper Research has taken a bearish stance on Ethereum (ETH) and related stocks like BitMine (BMNR), arguing that the network's economics have deteriorated following the December 2025 "Fusaka" network upgrade. The firm's report contends the upgrade flooded Ethereum with excess block space, which has "impaired ETH tokenomics" and driven transaction fees sharply lower.
The core of Culper's thesis is that the significant drop in transaction fees has reduced validator staking yields. This dynamic, the report warns, could create a negative feedback loop where declining yields reduce staking demand and, consequently, network security. Culper estimates that Ethereum fees have dropped by roughly 90% since the Fusaka upgrade.
The report also highlighted that Ethereum co-founder Vitalik Buterin sold nearly 20,000 ETH (worth approximately $40 million) this year, citing data from blockchain tracker Lookonchain. "Vitalik is selling, while bulls like Tom Lee are clueless as to ETH’s new reality," the report stated. "We’re with Vitalik."
Culper directly challenges the bullish narrative from Tom Lee, Chairman of Ethereum-focused treasury firm BitMine. Lee has pointed to rising transaction counts and active addresses as evidence of strong network fundamentals. However, Culper's analysis claims a significant portion of this activity surge stems from "address poisoning attacks," a scam tactic, making those metrics misleading.
"By Lee’s own logic, if utility is NOT going up, then ETH is in a death spiral," the report argued. "This is exactly what we believe is happening."
The short thesis extends to BitMine (BMNR), one of the largest corporate accumulators of ether. Since July, the company has amassed roughly 4.4 million ETH as part of its treasury strategy. With ether prices down from recent highs, DropsTab data indicates these holdings are estimated to be 45% underwater, representing roughly $7.4 billion in unrealized losses.
In a contrasting development, BitMine Immersion has continued its aggressive accumulation strategy despite market turbulence. According to a report from CryptoRus, the firm recently purchased approximately 50,900 ETH, bringing its total holdings to about 4.47 million ETH—roughly 3.7% of the circulating supply. CEO Tom Lee stated the buying is deliberate, expecting a market rebound, and views the price decline as an opportunity.
BitMine did not return a request for comment on Culper's report by press time.
