ETHZilla sells $40M in Ether to fund share buybacks

ETHZilla, an Ethereum treasury corporation listed on Nasdaq under the ticker symbol ETHZ, has sold approximately $40 million of Ether (ETH) and will use the capital to fund its share buyback program. 

That step is part of a broader effort to enhance shareholder value and narrow the discount between the firm’s share price and its net asset value (NAV).

According to the company, the ETH was sold on October 24, as disclosed in a press release the same day.. Since then, ETHZilla has repurchased approximately 600,000 of its ordinary shares for around $12 million.

The buybacks fall under a board-approved $250 million authorization plan issued in August. In addition to returning significant capital to the trust at this price, the plan gives ETHZilla the flexibility to buy back shares opportunistically when its stock trades below NAV, effectively acknowledging that the company believes its market value doesn’t fully account for the value of its Ether holdings.

After the news was released, ETHZilla rose 14.5% during Monday’s trading session and then increased by 9% in after-hours trading to above $22.50 per share, according to Google Finance. Even with the jump, the price is still well off a previous high set around $107, when the company initially disclosed plans to raise funds for its Ethereum treasury project.

Buybacks aim to close the discount to NAV

ETHZilla’s management team presented the deal as a strategic repositioning aimed at delivering value to shareholders. In a statement, McAndrew Rudisill, Chairman, noted that the company plans to continue selling Ether while repurchasing shares, as ETHZ trades at a significant discount to NAV. This will reduce the number of shares in circulation, thereby strengthening the net asset valuation.

Currently, the firm still has roughly $400 million in Ether remaining on its balance sheet even after the sale. That means the $40 million sale was roughly 10% of its crypto reserves, making plenty of headroom for future buybacks.

ETHZilla’s investor roster has also garnered attention. In August, Peter Thiel’s Founders Fund bought a 7.5 percent stake in the company, Business Insider reported. It was viewed as a sign of increasing institutional interest in Ethereum-based treasuries and digital asset-backed companies.

ETHZilla rebranded earlier this year to focus specifically on investments in the Ethereum ecosystem, subsequently pivoting into digital asset management and blockchain investment. Its treasury model reflects traditional investment trusts, but with the added benefit of on-chain transparency and direct exposure to crypto assets.

Market reacts to crypto treasury going mainstream

The sale demonstrates how blockchain-based treasuries are increasingly acting as capital managers, not just accumulating and holding crypto assets. By converting some of its ETH into equity buybacks, ETHZilla is combining DeFi strategies with corporate finance tools.

Analysts said the move could help stabilize the company’s market performance, noting that it reflects a disciplined approach to its balance sheet strategy. They added that by selling a small portion of its Ether holdings to narrow the NAV gap, ETHZilla may attract traditional investors seeking crypto exposure with lower volatility.

However, critics note potential risks. Unloading large quantities of Ether would be liable to incur market timing risk for the company should the price of ETH make a fast recovery. It also raises the question of whether Crypto Treasuries should be held by long-term investors or liquidity managers working toward short-term equity targets.

ETHZilla’s tactic aligns with methods commonly used in mainstream finance. Firms like Grayscale and Strategy have long grappled with such NAV dislocations tied to crypto prices. ETHZilla’s practice of selling ETH to finance buybacks could, should it succeed, become a model for how other crypto-backed companies treat valuation gaps.

The company stated that it would continue to buy back shares “until the discount to NAV is normalized.” This suggests that more Ether sales are on the horizon in the months to come as ETHZilla attempts to balance a strong position in crypto with its stock price.

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