Summary The article revisits Ether Machine/Dynamix Corporation (ETHM) as the merger remains pending and shares have declined to near $10. ETHM now holds nearly 497k ETH, valued at over $1.5 billion, and is the third largest ETH DAT by holdings. Despite apparent operational strengths, ETHM shareholders currently lack direct ETH exposure until the merger is finalized. While interesting, the warrants (ETHMW) are likely still overpriced even after pulling back 35% over the last 4 months. I last covered the proposed Ether Machine/Dynamix Corporation ( ETHM ) merger in July for Seeking Alpha. At that time, I initiated coverage with a 'hold' call and concluded that buying Dynamix shares wasn't necessary until after the business combination was complete. One of the things I laid out in that article was the fact that until the merger was official, the Dynamix shares likely had limited upside relative to The Ether Reserve LLC as it is the latter that is actually acquiring the Ethereum ( ETH-USD ) for the post-merger company: Right now, The Ether Reserve LLC is where the money would be made should the price of ETH continue raising. DYNX is probably a buy at $10. I'm not as convinced at $12-15. However, if the shares of the common do move toward that mid-teen level, the warrants get very interesting. This has proven to be the correct take in my view. The stock has fallen by 13% over the last 4 months from $11.81 down to $10.28: Data by YCharts Furthermore, the finalization of the merger that was expected this quarter has yet to manifest. Following the ticker change from DYNX to ETHM in August and with shares now closer to $10, it could be time to give this idea another look. The Ether Machine The Ether Machine submitted its S-4 to the SEC back in September. Despite the lack of a finalized merger, The Ether Machine has continued its ETH acquisition journey. The company is now the third largest ETH DAT in the market based on Ethereum holdings. Ether Machine ETH Holdings (StrategicETHReserve) As of the company's last disclosure, The Ether Machine LLC is holding just under 497k ETH tokens. At current Ethereum values, the company's ETH hoard is valued at just over $1.5 billion. Back in October, the company announced that it had generated 1,350 ETH from staking rewards and cited cost efficiencies relative to the rest of the industry due to a 'vertically integrated' staking model that strips out management fees paid by other Ethereum DATs: The Ether Reserve's treasury is fully staked onchain, with validators consistently ranked among the top 5% for staking reward efficiency across its active validator set, meaning the ETH already deployed is generating market-leading yield. While this sounds great and theoretically positions the company as one of the better ETH staking plays in the DAT landscape, the major drawback for Dynamix Shareholders is that until this deal is finalized, ETHM doesn't actually have any direct exposure to ETH upside yet. ETHM Shareholders Given the fact that pre-merger ETHM shares still just represent ownership of a blank check company, I see valuing Dynamix stock as largely dependent on the trust account investments held by the company. At the end of September , the trust account held $171.9 million: 10-Q, Page 10 (Dynamix) Given there are 16.6 million shares of ETHM outstanding, there is some justification in buying the stock before the merger completes. For instance, the trust assets are held in money market funds. Each of the last three quarters, the value of that fund has grown by $1.6 million per quarter. Thus, with just a few weeks remaining in the year, we can reasonably assume the trust will be valued at roughly $173.5 million when the company files for Q4. At 16.6 million shares outstanding, if an ETHM shareholder were to redeem pre-merger, they would get back $10.45 per share. Which means that at the December 8th closing price of $10.29, the market is currently discounting the redemption value of the shares by 16 cents. At about 1.5%, this isn't likely a juicy enough arbitrage to lead to significant share redemption prior to merger in my view. As was the case when I covered Dynamix back in July following the proposed merger announcement, I think the more interesting potential play may be in the warrants; especially considering those shares have pulled back a bit more than the common stock by percentage move. ETHM vs ETHMW since 7/24/25 (Seeking Alpha) ETHM stock has pulled back 13% since July 24th. The warrants are down nearly 35%. That said, the warrants are implying a post-merger ETHM price of $12.90 given the current warrant pricing levels and the $11.50 exercise price for the common stock. Given that, the warrants are overpriced in my opinion. However, consider the upside potential in ETHMW if the price of Ethereum were to rally back to highs from this past summer following merger finalization: Common vs Warrants ETHM ETHMW 12/8 Close $10.29 $1.40 Value at $15 ETHM Price $15.00 $3.50 Potential Upside 45.8% 150.0% Value at $12.50 ETHM Price $12.50 $1.00 Potential Upside 21.5% -28.57% Source: Seeking Alpha, Analyst's calculations Hypothetically, if Ethereum appreciated by 45% following a successful merger, the common stock would figure to perform roughly in line with the move in the underlying asset. However, the warrants would more than double if the value of ETHM were to move from a little over $10 per share to something closer to $15. Of course, 45% is a big move even for digital assets and there is certainly no guarantee that such price appreciation would take place. Furthermore, even if Ethereum were to rise by 20% post-merger and generate something like $12.50 in ETHM common, the warrants would actually be overpriced at current levels. Closing Summary My view on ETHM is that it's still a 'hold' rather than a 'buy.' I think upside will be limited until the merger is completed. And following a completed merger, I think the warrants might be more interesting to consider given the greater upside potential. I'm taking that stance because there are already several Ethereum DATs in the market that provide staked ETH exposure today without the time risk of a merger completion. Many of them are even trading at size-able discounts to net asset value. However, most of those companies didn't transition to ETH DATs through a SPAC; making The Ether Machine different due to the warrants. I could certainly justify going long ETHMW at some point if the price is right. For me, $1.40 is still a bit high but we're getting closer to where I would personally take a shot or two on the warrants.
