Ethereum-focused treasury firm ETHZilla stated it has bought roughly $40 million price of ether to fund ongoing share repurchases, a maneuver geared toward closing what it calls a “vital {discount} to NAV.” In a press assertion on Monday, the corporate disclosed that since Friday, October 24, it has purchased again about 600,000 frequent shares for roughly $12 million beneath a broader authorization of as much as $250 million, and that it intends to proceed shopping for whereas the {discount} persists.
ETHZilla Dumps ETH For BuyBacks
The corporate framed the buybacks as balance-sheet arbitrage somewhat than a strategic retreat from its core Ethereum publicity. “We’re leveraging the energy of our steadiness sheet, together with decreasing our ETH holdings, to execute share repurchases,” chairman and CEO McAndrew Rudisill stated, including that ETH gross sales are getting used as “money” whereas frequent shares commerce under web asset worth. He argued the transactions could be instantly accretive to remaining shareholders.
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ETHZilla amplified the message on X, saying it could “use its sturdy steadiness sheet to assist shareholders by means of buybacks, scale back shares out there for brief borrow, [and] drive up NAV per share” and reiterating that it nonetheless holds “~$400 million of ETH” on the steadiness sheet and carries “no web debt.” The corporate additionally cited “current, concentrated quick promoting” as an element protecting the inventory beneath stress.
The market-structure logic is easy: when a digital-asset treasury trades under the worth of its coin holdings and money, shopping for again inventory with “coin-cash” can, in concept, collapse the {discount} and raise NAV per share. However the optics are contentious inside crypto as a result of the mechanism requires promoting the underlying asset—right here, ETH—to buy fairness, probably weakening the very treasury backing that buyers initially sought.
Demise Spiral Incoming?
Well-liked crypto dealer SalsaTekila (@SalsaTekila) commented on X: “That is extraordinarily bearish, particularly if it invitations comparable conduct. ETH treasuries usually are not Saylor; they haven’t proven diamond-hand will. If treasury firms begin dumping the coin to purchase shares, it’s a dying spiral setup.”
Skeptics additionally zeroed in on funding selections. “I’m principally curious why the corporate selected to promote ETH and never use the $569m in money that they had on the steadiness sheet final month,” one other analyst Dan Smith wrote, noting ETHZilla had simply stated it nonetheless holds about $400 million of ETH and thus didn’t deploy it on recent ETH accumulation. “Why not simply use money?” The query cuts to the core of treasury signaling: utilizing ETH as a liquidity reservoir to defend a reduced fairness will be learn as rational capital allocation, or as capitulation that undermines the ETH-as-reserve narrative.
Past the buyback, a retail-driven storyline has quickly fashioned across the inventory. Enterprise Insider reported that Dimitri Semenikhin—who lately turned the face of the Past Meat surge—has focused ETHZilla, saying he bought roughly 2% of the corporate at what he views as a 50% {discount} to modified NAV. He has argued that the market is misreading ETHZilla’s steadiness sheet as a result of it nonetheless displays legacy biotech outcomes somewhat than the present digital-asset treasury mannequin.
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The identical report cites liquid holdings on the order of 102,300 ETH and roughly $560 million in money, translating to about $62 per share in liquid belongings, and calls out a 1-for-10 reverse cut up on October 15 that, in his view, muddied the optics for retail. Semenikhin flagged November 13 as a possible catalyst if outcomes present the pivot to ETH producing earnings.
The corporate’s personal messaging emphasizes the discount-to-NAV lens somewhat than a change in technique. ETHZilla instructed buyers it could maintain shopping for whereas the inventory trades under asset worth and highlighted a aim of shrinking lendable provide to blunt short-selling stress.
For Ethereum markets, the instant circulation impact is restricted—$40 million is marginal in ETH’s day by day liquidity—however the second-order threat flagged by merchants is behavioral contagion. If different ETH-heavy treasuries observe the playbook, promoting the underlying to purchase their very own inventory, the circulation might turn out to be pro-cyclical: cash are bought to shut fairness reductions, the promoting pressures spot, and wider reductions reappear as fairness screens rerate to the weaker mark—repeat.
That’s the “dying spiral” situation skeptics warn about when the treasury asset doubles as the corporate’s sign of conviction.
At press time, ETH traded at $4,156.
Featured picture created with DALL.E, chart from TradingView.com
