ETHZilla's $74.5M ETH Sell-off: What Happened to Its Treasury Strategy?

Summary:
ETHZilla, a company backed by Peter Thiel, is abandoning its strategy of holding large amounts of Ethereum (ETH) and has sold $74.5 million worth of ETH. This sell-off indicates a significant change in its financial strategy as the company seeks to redeem outstanding convertible notes, amid a challenging market for crypto assets.

Key Takeaways:

ETHZilla sold 24,291 ETH for approximately $74.5 million as part of a major shift away from holding crypto assets.
The company now holds about 69,800 ETH, valued at over $200 million.
Cash from its balance sheet will be used for early redemptions of senior secured convertible notes.
ETHZilla is refocusing its operations and discontinuing its modified net asset value tracker amid a stock price decline.
Broader trends indicate that many corporate holders of cryptocurrency are facing substantial unrealized losses.

ETHZilla's Shift in Strategy

Peter Thiel-supported ETHZilla has started to unwind its aggressive holdings in Ethereum (ETH) by selling off $74.5 million worth of the cryptocurrency, indicating a significant change from its previous treasury model.

In its regulatory filing late Friday, the Nasdaq-listed company disclosed that it sold 24,291 ETH at an average price of approximately $3,068, resulting in about $74.5 million in total.

The proceeds from this sale will be allocated to redeeming outstanding senior secured convertible notes, with the early redemption dates set for December 24 and December 30.

After this transaction, ETHZilla's ETH holdings decreased to about 69,800, which translates to a value exceeding $200 million at current market prices. The company also mentioned plans to utilize existing cash from its balance sheet to complete these redemptions.

Ending the mNAV Tracker and Focusing on Core Operations

Along with the sale, ETHZilla announced that it will be discontinuing its modified net asset value (mNAV) dashboard. This tool was previously used to monitor the relationship between the company's market capitalization and the value of its ETH holdings.

Management indicated that future communications would emphasize updates on the balance sheet, revenue growth, and cash flow from its tokenization of real-world assets, signifying a shift in focus and priorities.

This strategic move coincides with a declining trend in ETHZilla’s stock price. On Monday, shares fell around 4%, marking a 96% drop since hitting highs in August, and leaving the stock below the value of its remaining crypto assets.

ETHZilla had initiated accumulation of Ethereum in late July, but at the start of the fourth quarter, they sold another $40 million worth of ETH to facilitate share buybacks. Yet, despite these efforts, the stock continues to face pressure, now trading below $7, a significant decline compared to around $20 at the time of the buyback announcement.

Challenges in the Ethereum Market Cycle

ETHZilla’s retreat reflects the broader challenges faced by many companies holding digital assets. Several public companies that were eager to add cryptocurrency to their balance sheets during the summer's price surge are now experiencing substantial declines in the market value of their holdings.

This disconnect has restricted their abilities to raise new capital, often forcing them to sell off their crypto assets to manage debts and improve liquidity rather than accumulating more.

In ETHZilla's case, the challenge lies not so much with Ethereum itself, but rather the timing and concentration of their purchases. The company primarily accumulated its ETH during market peaks.

For instance, the largest purchase occurred on August 12, when ETHZilla obtained over 82,000 ETH at an average price of $3,807, totaling more than $300 million.

Further purchases later in August were made at even higher prices, complicating the company's overall cost basis. Small acquisitions in September were insufficient to mitigate this exposure. As Ethereum's price fell by more than 28% in the past three months, dropping to around $2,980, ETHZilla's strategy swiftly turned negative.

By the time ETHZilla started reducing its holdings in late October, it was already facing embedded losses from its earlier buying strategy.

The Wider Impact on Corporate ETH Holdings

ETHZilla is not alone in facing these challenges; other notable Ethereum treasury firms are also feeling the pressure.

BitMine Immersion Technologies, recognized as the largest corporate ETH holder, reportedly has billions in unrealized losses but continues to expand its staking-focused operations.

Meanwhile, SharpLink Gaming, which is backed by Ethereum co-founder Joseph Lubin, remains committed to its ETH strategy despite market difficulties. Other firms, such as Fundamental Global, The Ether Machine, and Quantum Solutions, also hold ETH below their average purchase prices.

Simultaneously, the demand from corporate treasuries has sharply declined. Data from Bitwise reveals that companies acquired only 370,000 ETH in November, down by over 80% from the peak in August.

Data from DefiLlama further indicates that November marked the weakest month of 2025 for digital asset treasury inflows, with Ether experiencing net outflows even as Bitcoin treasuries continued to draw in capital.