Hardware wallets are somewhere in between a paper wallet and a browser-based hot wallet. They’re harder to hack than software, harder to lose than paper, but they’re not infallible. They can be lost or stolen, and users need to be able to trust the device to create their keys properly in the first place.

“Air-gapped systems help, but they are not a perfect fix,” Bobby Gray, founder of TEXITcoin, told CoinDesk. “Security has to begin with how the keys are generated and continue through every part of the custody process.”

This is, unfortunately, where things went wrong for Coinkite, the maker of the Coldcard wallet.

A bug in the system

In March 2016, the Toronto-based bitcoin company told customers it was sunsetting its hosted hot wallet. Running an online financial services company had brought persistent floods of junk internet traffic aimed at knocking their services offline, along with mounting legal costs and regulatory complications.

Instead, Coinkite said it wanted to try something different. It wanted to build decentralized hardware and “software-not-as-a-service.” That was early in crypto’s history, before Bitcoin’s second halving, when one entire bitcoin was trading slightly above the $400 mark.

Coinkite’s pivot first produced Opendime in April 2016. The small USB stick generated and concealed a private key, allowing bitcoin to be passed from one person to another like a physical bearer instrument. Physically breaking the device’s seal revealed the key and allowed the funds to be spent.

Tom Lee’s Bitmine Immersion Technologies, an Ethereum treasury company, resumed its Ether purchases last week, bringing it closer to a key business target of owning 5% of the second-biggest cryptocurrency’s supply despite challenging market conditions.

The company disclosed Monday that it acquired 9,926 Ether (ETH) during the week ending Aug. 16, bringing its total holdings to roughly 5.82 million ETH, or about 4.8% of Ethereum’s circulating supply. At an ETH reference price of $1,893, Bitmine’s Ether holdings were valued at roughly $11 billion. However, much of the company’s ETH was acquired at significantly higher prices.

Ether’s price was little changed on Monday, sitting just above $1,900.

The latest purchase puts Bitmine within striking distance of its long-term “Alchemy of 5%” target of holding 5% of the total ETH supply.

Bitmine’s conviction has been tested by a prolonged bear market for Ether, which has sharply eroded the value of its digital asset treasury. The company is sitting on more than $8.4 billion in unrealized losses on its ETH holdings, according to industry data.

With a portfolio value of more than $11 billion, BitMine’s unrealized losses are around 43%. Source: DropsTab

Still, Bitmine has continued accumulating Ether, making purchases every week since launching its ETH treasury strategy in June 2025.

Related: Ethereum devs to narrow 66 proposals tied to Hegotá upgrade

Bitmine’s staked Ether approaches $10 billion in value

Although Bitmine is sitting on large unrealized losses on its Ether holdings, its staking operations continue to generate yield. The company said it is staking more than 5 million ETH, worth roughly $9.6 billion at current prices.

That staking has enabled Bitmine to earn protocol rewards for helping secure the Ethereum network, providing a predictable source of yield regardless of short-term ETH price movements. Based on a seven-day staking yield of 2.61%, Bitmine projects annualized staking rewards of roughly $287 million, according to Lee.

Related: Crypto Biz: Bitcoin’s $116M self-custody wake-up call

“DeFi is a remarkable innovation; however, it has achieved limited institutional adoption,” Schnarch said in a statement. “Current product offerings fall short of meeting the traditional finance bar, especially as it pertains to compliance and technical requirements.”

The move is a logical response to the shift in DeFi’s user base, according to Ran Hammer, chief business officer at Orbs.

“Retail participation is a fraction of what it was, and the chain has quietly become a venue for settlement, execution and interaction between financial institutions,” Hammer said. “Since DeFi summer, the space has turned into something completely different, essentially a new financial layer for institutions. So bringing in leadership that speaks that language is exactly the right direction.”

The size of the allocated budget, the largest approved by Compound’s decentralized autonomous organization (DAO), may help underline its commitment.

“The $52 million and a bench with that much institutional experience is a serious move, and it should improve its execution,” said Himanshu Sahay, co-founder and chief technology officer of crypto lending firm Arch Lending, but institutions will want more than credentials. They “aren’t underwriting teams, they’re underwriting structures.”

On Friday, the 21Shares Polkadot ETF (TDOT) reported that it realized $4.52 of loss per share by selling Polkadot (DOT) tokens to make each $1 per share of staking payouts last quarter.

The fund sold 98,505 DOT last quarter to generate $107,510 of cash payments to shareholders. Those sales finalized losses of $485,553 due to the dramatic decline of DOT.

Specifically, the price of DOT declined 34% during Q2 2026. For the 12 months ending June 30, 2026, DOT declined 76%.

TDOT shareholders do not actually receive staking rewards denominated in DOT. Instead, the fund must sell DOT to mimick and provide the corresponding staking rewards in USD for its shareholders.

All things considered, the payout is embarrassing. Holding TDOT from April through June this year entitled shareholders $0.146980 per share of payouts, which certainly did not compensate for the fund’s 34% share price decline from $14.95 to $9.86.

This is, of course, not any particular fault of 21Shares but rather the fault of DOT itself, which continues to fall out of favor with investors.

DOT was supposed to power parallelized execution capable of roughly 1 million transactions per second across up to 100 parachains, an ‘internet of blockchains’ with shared security, and seamless cross-chain interoperability.

In practice, total value locked across all parachains sits at less than $100 million, and DOT trades near 97% below its all-time high as investors find more utility elsewhere.

Paying out staking rewards crystallizes DOT losses

TDOT records cash payouts as a distribution of staking income. Nothing in the filing hides the mechanism by which it realized losses, and shareholders cannot interpret the cause of this $485,553 loss as unrelated to generating staking payouts.

Indeed, the trust unambiguously states, “Aggregate distributions of $107,510 or $0.146980 per share reduced the Trust’s DOT holdings through the sale of DOT to generate cash.”

That crystallized more than four dollars of permanent loss for every $1 it distributed.

By comparison, four peer crypto staking funds disclosed a realized loss in Q2, yet none lost more than $0.89 per $1 distributed. Respectively, Invesco’s Galaxy Solana fund realized $0.89 of loss, the same sponsor’s Solana fund disclosed $0.74 of loss, its Sui fund finalized $0.31, and BlackRock’s staked ether fund reported $0.25.

Ethereum treasury company Bitmine Immersion added more of the token to its balance sheet, bringing its total holdings up to 5.815 million tokens.

In an announcement Monday, the company led by Chairman Tom Lee said it bought another 9,926 ETH last week, continuing its streak of weekly buys that began in June 2025 when the company launched.

Bitmine, which trades under the ticker BMNR, now holds 4.8% of ETH’s total supply with its tokens worth about $11 billion at the current price of $1,904.

Lee said the ETH/BTC ratio has broken above a years-long downward trend, which he sees as a sign that investors are starting to price in growing demand for Ethereum from tokenization and AI-agent applications.

On the macro front, he expects “easing financial conditions to be a tailwind for crypto,” he said in a statement.

ETH is up about 1.6% over the past 24 hours while BMNR is trading more than 2% higher today.

The company also bought an additional 1.7 million shares of its own stock last week, now owning 20.8 million shares under a previously authorized $4 billion buyback program.