Sharplink: Where The Market Sees Risk, I See Mispricing

Summary Sharplink trades at a steep discount to NAV, driven by concentrated ETH exposure and a smaller non-ETH asset base versus top peers. SBET’s recent $75M capital raise at a ~41% premium strengthens its cash position, offering accretive potential for NAV per share. Around 67% of SBET’s ETH is deployed in lower risk native staking, with the remainder in institutional-grade but higher risk liquid staking protocols. SBET’s partnership with Galaxy Digital for a $125M Onchain Yield Fund shifts DeFi risk management to Galaxy, enhancing Sharplink's operational robustness. Sharplink, Inc. ( SBET ) adopted the Ethereum ( ETH-USD ) treasury strategy last year at the height of the digital asset treasury [DAT] strategy momentum and has since seen its ETH position grow. Sharplink holds ~876k ETH today, worth ~$1.48 billion at ETH current spot price around $1,700. Ethereum treasury strategy companies have had the unique advantage, compared to their Bitcoin counterparts, of being able to compound earnings through staking, and the rewards from staking directly compound the value of the net underlying assets, which investors ultimately benefit from. This has increased the popularity of Ethereum plays among DATs. Holding ETH also means the ability to explore other yield opportunities in DeFi beyond the native staking rewards. Yield seeking in DeFi is the route SharpLink has taken and this has gradually become its unique selling point among digital asset treasuries. An Ethereum DAT peer like Bitmine Immersion ( BMNR ) favors compounding value through native staking from its own validator platform called MAVAN. And to compound ETH and finance opportunistic ETH purchases they are showing a preference for issuing preferred shares with attractive yields to attract investors, akin to Strategy's ( MSTR ) preferred shares playbook. While DATs have different asset compounding strategies, each unique strategy carries its own layer of risks. I pointed out in my latest piece covering Bitmine how Bitmine's issuance of the 9.5% perpetual preferred shares ( BMNP ) dilutes the economic interests of BMNR common shareholders on top of the volatility risk they face. So far, SBET investors haven't been exposed to that particular type of risk. But SBET's involvement in the DeFi ecosystem as a way to maximize or compound its treasury's intrinsic value poses different types of risks investors should be aware of. At this point in the crypto market cycle and the ~27% drop of BTC and ~43% drop in ETH's spot price YTD means digital asset treasuries like SBET, have seen their net asset value [NAV] compress, thus widening the discount to NAV; therefore, there are some attractive discounts to NAV showing up among digital asset treasuries currently. And at this point in the DAT market cycle, I believe merely chasing discounts and buying the lowest price-to-NAV (P/NAV) or mNAV among DAT companies is too much of a simplistic approach to investing in these vehicles and would likely not result in maximized profits when the bull market takes off and digital asset prices regain momentum. A DAT’s stock price might be discounted more than peers because the market is misreading or misunderstanding its yield and NAV compounding strategy, or maybe for reasons as trivial but real as not having an investor-community popular "face of the DAT" who has built a following that strongly believes in them and their digital assets compounding strategy. The type of figurehead Michael Saylor has been to Strategy, or Tom Lee has been to Bitmine. Digging into what the discount is how to analyze these stocks, and that is what this piece on SBET will focus on. Sharplink is Steeply Discounted, Here’s Why The following table, where I have compared the three largest ETH treasuries on a P/NAV and EV mNAV basis, shows that SBET currently sees the steepest discount to its net asset value among top peers. Bit Digital ( BTBT ) is in a league of its own and understandable to still trade at a decent premium because of its active AI/HPC infrastructure revenue. So for the rest of this piece, I’d focus more on Bitmine as a direct peer in evaluating SBET. SBET BMNR BTBT Total ETH Held ~876k ETH ~5.6 million ETH ~158k ETH ETH Stash Value (@ ~$1,700 spot price) $1.48 billion $9.55 billion $269.4 million Non-ETH Portfolio Value $16.9 million (Cash as of Q1 end) $770 million (Cash + ORBS/Beast stakes) $322.10 million (WYFI equity stake) Consolidated Total Asset NAV $1.5 billion $10.4 billion $591.5 million Enterprise Value [EV] $1.03 billion $8.87 billion $1.05 billion P/NAV Ratio (consolidated) ~0.7x ~0.82x ~1.32x EV / mNAV (ETH Only) 0.7x 0.93x 3.9x EV / mNAV (Consolidated) 0.69x 0.85x 1.78x The companies in the above table all face similar volatility and custody risks tied to their ETH holdings. But why is SBET more discounted? Looking at SBET versus BMNR's assets today, I strongly believe the deeper discount in SBET exists because of a combination of factors and the story surrounding the company and its ETH strategy. The discount is much less tied to the nominal NAV of the ETH treasury.. Factors like the smaller asset base outside of ETH that sits in the treasury are driving SBET’s discount. SBET had $16.9 million in cash outside its ETH holdings reported as of Q1 end, until today’s raise changed that cash profile. Meanwhile a peer like BMNR has had a much stronger balance sheet backing, comprising the moonshot portfolio made up of $88 million worth of Eightco Holdings ( ORBS ) shares and a $180 million stake in Beast Industries, as well as total cash and other marketable securities worth $502 million. This brings the portion of NAV outside ETH to an impressive $770 million. The registered direct offering closing today (June 23), which raised $75 million gross, has mitigated this risk profile and now puts SBET in a stronger cash position. The ~10 million shares were issued at $7.49 are at ~41% premium over last Friday's SBET weekly close price of $5.29, and accompanying warrants at an $8.15 exercise price means dilution from the other ~10 million warrants is somewhat deferred for now. And even if SBET's stock reaches the $8.15 price, that would likely inject a fresh ~$81.6 million gross capital into SBET’s treasury. The premium also means accretion of value to existing shareholders as cash per share just increased, and any part of the net proceeds used in purchasing ETH would be accretive to NAV per share. Beyond the weakness of cash balances as an offset to the ETH treasury, I believe the second major factor driving SBET's deeper discount has been its perceived 1:1 correlation of NAV to Ethereum, which is also a by-product of its balance sheet composition. I strongly believe this near 1:1 correlation of SharpLink’s NAV to purely Ethereum has created a risk profile distinct from top peers. Meanwhile Bitmine’s moonshot portfolio is being viewed as high growth because of what it is composed of. The ORBS position has exposure to OpenAI private equity amongst other assets, and further exposure to the creator economy through Beast Industries. These exposures are one of the reasons I believe that the market awards BMNR a higher valuation. For Bit Digital, the $322.10 million WhiteFiber ( WYFI ) business is substantial enough to create the same effect, or even a better one than Bitmine due to the AI and data center narrative. That premium over Bitmine and Sharplink is visible in the valuation of Bit Digital today as the price-to-NAV and the EV-to-mNAV calculations in the table I shared earlier show. But I believe Sharplink should not be written off, even though its other business isn't as “trendy” and all the rage right now and does not command the same narrative premium as AI does for Bit Digital or that Bitmine enjoys through its portfolio composition. Sharplink’s rebrand from SharpLink Gaming earlier this year already gives all the signals we need to show that the iGaming business line is being treated as legacy. The business contributed very little to Sharplink's $12 million consolidated revenue in Q1, which surged around 1,500% YoY. iGaming brought in a paltry $557k in revenue the remaining $11.5 million came from ETH staking, and the good part is that the iGaming cost of revenue has not exceeded revenue thus the business line maintains a positive gross margin. But with the rebrand and the seemingly low priority to iGaming, I am inclined to believe that that business line will likely see a natural sunsetting except other opportunities emerge in the iGaming space that will further help buoy the ETH treasury. Potential Near Term Catalysts for SBET, and What to Watch Off the bat, every investor in digital asset treasuries knows that the primary and most direct catalyst for these stocks is the price surge in the underlying digital asset. DATs anchored to ETH have an asymmetric upside potential as ETH itself is positioned for powerful catalysts when macro pressure eases and the crypto market picks up momentum again. How soon that will be depends on a culminating mix of macro factors which include Fed rates cut, Bitcoin halving tailwinds, and regulatory clarity especially surrounding the Clarity Act. But away from the broader crypto market momentum, another catalyst emerges for SBET from watching how the inherent risk in how Sharplink handled its ETH treasury is being mitigated and also opens room for better yield generation in the DeFi ecosystem where Sharplink actively pursues extra alpha in addition to native ETH staking. Galaxy Digital ( GLXY ) and Sharplink’s joint $125 million Onchain Yield Fund, launched last month, is where it all comes together. While the headlines have focused on the substantial amount being put into the vehicle, I anticipate massive operational growth on the part of Sharplink through this deal because the deal structure means Galaxy will serve as the exclusive investment manager handling the protocol selection, exposure sizing, and ongoing monitoring, and that shifts the risks greatly towards Galaxy's proven risk-management framework. This does not mean risks related to smart contract exploits are totally taken away from Sharplink’s DeFi investments, but it means that Sharplink’s capital is now being insulated by institutional-grade execution and diligence. This does not also mean Sharplink’s treasury architecture and choice of DeFi instruments has been random or less institutional compliant before now. In fact, Sharplink has prioritized deployment into Liquid Collective’s LsETH instead of an ordinary liquid staking alternative like Lido Finance's stETH, where corporate capital can be intermingled with unregulated retail funds. Liquid Collective’s LsETH was specifically built for institutions and enforces a stricter compliance and audit framework, as well as KYC and AML mandates. It also features a programmatic insurance coverage to protect corporate treasuries against an on-chain penalty called "slashing,” which happens when a validator node breaks network rules and has its staked ETH programmatically seized by the blockchain. (For readers who may be new to the concept of liquid staking, you can find detailed coverage in one of the earliest pieces I wrote here on Seeking Alpha covering liquid staking on Ethereum.) In the past, I have been tracking the percentage of Sharplink's ETH stash that were locked in native staking (bears the minimum risk when measured against other DeFi yield strategies), and which were deployed in liquid staking protocols on Liquid Collective’s LsETH and ether.fi’s wrapped eETH (weETH). These are the two liquid staking and restaking protocols Sharplink have deployed to so far, besides native ETH staking. Total ETH holdings held as of March 31, 2026, were comprised of 589,305 native ETH, 209,361 ETH as-if redeemed from LsETH and 72,155 ETH as-if redeemed from WeETH. - Q1 2026 earnings press release, footnote¹. Going by the numbers reported by management for the end of Q1, Sharplink has about 589.3k ETH (67.7% of its total ETH) deployed in native staking, which is currently a little over $1 billion based on the $1,700 ETH price I have used throughout this piece. While around 209.3k ETH (24% of total ETH stash as of Q1 end) is held in Liquid Collective’s lsETH, and around 8.3% or 72k ETH is deployed in ether.fi ’s weETH. Management also provided an updated snapshot for how the ETH is deployed across staking as of May 4, but the allocations only changed very marginally by an insignificant few basis points. Total ETH holdings held as of May 4, 2026, were comprised of 590,823 native ETH, 209,789 ETH as-if redeemed from LsETH and 72,372 ETH as-if redeemed from WeETH. - Q1 2026 earnings press release, footnote². As the numbers show and prove, Sharplink hasn't just been throwing ETH around in DeFi ecosystems or chasing liquid staking rewards blindly. I also believe that the risk associated with its concentrated ETH exposure as well as the DeFi protocols exposure has unfairly discounted the stock. Another reason the market treats liquid staking exposure with skepticism is that local intraday exchange dips force GAAP impairment write-downs, which temporarily masks the true health of the native staking core. Tracking the ETH deployment, I find it encouraging that an overwhelming 67% is kept in native staking where the risk across the staking tiers is lowest. And that amount ($1.001 billion) single-handedly backstops over 90% of Sharplink’s current $1.11 billion EV. Risk and Takeaway While I have pointed out the key risks as this piece went along, it is worth reiterating that SBET’s NAV is tied to ETH in a near 1:1 correlation, further compounded by risks from portfolio exposure to DeFi and smart contracts exploits. This means SBET is a stock for investors with a higher threshold for volatility. And if I were to classify SBET among digital asset treasuries from the perspective of its fitting investor base, I’d say this is a better proxy for crypto investors who are no strangers to DeFi and crypto yield strategies, who aim to compound returns while outsourcing the risks of navigating DeFi protocols and have their investment sit behind an institutional-grade risk management framework.