Peter Thiel’s ETHZilla Steps Back From Treasury Strategy After Major Ether Sale
Why Is ETHZilla Selling Ether Now?
ETHZilla has sold $74.5 million worth of ether to retire outstanding debt, less than six months after adopting an Ethereum-based digital asset treasury strategy. The company said it sold 24,291 ETH to redeem senior secured convertible notes, using most or all of the proceeds to complete the repayment.
The move highlights mounting pressure on smaller public companies that built treasury strategies around holding crypto rather than operating businesses with recurring revenue. Lower ether prices, debt servicing costs, and limited capital flexibility have narrowed the margin for firms trying to mirror the playbook popularized by bitcoin-focused treasury strategies.
After the sale, ETHZilla said it still holds 69,802 ETH valued at roughly $207 million. But the transaction marks a clear break from the accumulation narrative that initially drove investor interest earlier this year.
Investor Takeaway
ETHZilla’s ETH sale shows how debt and market drawdowns can force smaller treasury firms to liquidate holdings rather than keep compounding exposure.
Is This the End of ETHZilla’s Digital Asset Treasury?
The company’s latest disclosure suggests a strategic reset. ETHZilla said future valuation will depend less on crypto holdings and more on revenue and cash flow from its real-world asset tokenization business. That language signals a move away from framing equity value around net crypto assets alone.
ETHZilla, formerly the biotech firm 180 Life Sciences, entered a $425 million PIPE agreement in July with more than 60 investors as it adopted its digital asset treasury model. At the time, the shift aligned with a broader trend among smaller Nasdaq companies attempting to replicate the market response seen by bitcoin-centric treasury firms.
Since then, ETHZilla has sold ether twice. In October, it unloaded $40 million worth of ETH as part of a $250 million share repurchase plan. The latest sale, tied directly to debt repayment, underscores the limits of holding volatile assets on a balance sheet while managing leverage.
Why Are Smaller Crypto Treasury Firms Under Strain?
Ethereum’s price has fallen nearly 30% over the past three months, trading around $3,000. For firms relying on asset appreciation to justify premium equity valuations, that drawdown tightens capital headroom quickly. Unlike larger treasury vehicles with minimal leverage, smaller firms often carry debt that forces action when prices slide.
Digital asset treasuries depend heavily on market confidence and access to capital. When prices weaken, issuing equity becomes harder, while debt obligations remain fixed. ETHZilla’s decision to prioritize repayment reflects the reality that crypto-as-treasury strategies offer limited flexibility during downturns, especially outside bitcoin.
The shift also reflects a growing divergence between bitcoin and ether as treasury assets. Bitcoin-focused strategies tend to rely on long-term holding with minimal operational overlays. Ether-based treasuries face different dynamics, including staking yields, protocol changes, and competition from tokenized yield products.
Investor Takeaway
Smaller ETH treasury firms lack the balance-sheet resilience of larger vehicles, making them more exposed to price declines and financing constraints.
What Role Does Real-World Asset Tokenization Play Now?
Earlier this month, ETHZilla said it is pursuing a real-world asset tokenization strategy focused on auto loans, manufactured housing loans, aerospace equipment, and real estate. Unlike crypto treasury models, these businesses are structured to generate recurring revenue and cash flow rather than depend on asset price appreciation.
The company said its future value will be driven by that operating model, not by how much ether it holds. That framing aligns more closely with traditional equity valuation methods and may appeal to investors who grew cautious about crypto-heavy balance sheets.
ETHZilla also said it will discontinue its mNAV dashboard, which tracked market capitalization against crypto net assets. While the firm plans to continue publishing balance sheet updates, the removal of mNAV further distances the stock from crypto-centric valuation metrics that drove earlier trading activity.
How Are Markets Reacting?
ETHZilla’s shares surged more than 90% in August after news of a high-profile investment tied to its digital asset treasury strategy. Since then, enthusiasm has cooled. The stock was recently trading near $6.64, down nearly 4% on the day of the announcement, according to market data.