Ethereum-focused treasury firm ETHZilla said it sold about $40 million worth of ether to fund ongoing share buybacks, a move aimed at closing out what it calls a “significant discount to net asset value.” In a press release issued Monday, the company revealed that since Friday, October 24, it had repurchased approximately 600,000 shares of common stock for approximately $12 million under a broader authorization of up to $250 million, and that it intended to continue purchasing as long as the discount persisted.
ETHZilla abandons ETH for buybacks
The company presented the buybacks as a balance sheet arbitrage rather than a strategic withdrawal from its core exposure to Ethereum. “We are leveraging our balance sheet strength, including reducing our ETH holdings, to conduct share repurchases,” said Chairman and CEO McAndrew Rudisill, adding that ETH sales are used as “cash” while common stock trades below net asset value. He argued that the transactions would be immediately accretive to the remaining shareholders.
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ETHZilla amplified the message on The firm also cited “recent and concentrated short selling” as a factor keeping the stock under pressure.
The logic of the market structure is simple: When a digital asset treasury trades below the value of its coin and cash holdings, repurchasing shares with “cash coins” can, in theory, reduce the discount and increase the net asset value per share. But the optics are controversial within crypto, because the mechanism requires selling the underlying asset – here, ETH – to buy shares, which could weaken the liquidity support that investors were originally seeking.
Near-death spiral?
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Skeptics also focused on financing choices. “I’m mostly curious why the company chose to sell ETH and not use the $569 million in cash it had on its balance sheet last month,” wrote another analyst, Dan Smith, pointing out that ETHZilla had just stated that it still held around $400 million worth of ETH and therefore had not deployed it on new ETH accumulation. “Why not just use cash?” » The question goes to the heart of treasury signaling: using ETH as a pool of liquidity to defend discounted stocks can be interpreted as a rational allocation of capital, or as a capitulation that undermines the narrative of ETH as a reserve.
Beyond the buyout, a retail-driven storyline quickly formed around the stock. Business Insider reported that Dimitri Semenikhin, who recently became the face of Beyond Meat’s rise, targeted ETHZilla, saying he bought about 2% of the company at a price he sees as a 50% discount to the modified net asset value. He argued that the market is misinterpreting ETHZilla’s balance sheet because it still reflects existing biotech results rather than the current cash flow model of digital assets.
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The same report cites liquid holdings of around 102,300 ETH and approximately $560 million in cash, which translates to approximately $62 per share of liquid assets, and cites a 1-for-10 reverse split on October 15 that it believes muddied retail optics. Semenikhin flagged November 13 as a potential catalyst if results show ETH generating profits.
The company’s own messaging emphasizes reducing net asset value rather than changing strategy. ETHZilla told investors it would continue buying as long as shares trade below the asset’s value and outlined its goal of reducing loanable supply to ease short-selling pressure.
For Ethereum markets, the immediate flow effect is limited ($40 million represents marginal daily liquidity of ETH), but the second-order risk reported by traders is behavioral contagion. If other ETH-rich Treasuries follow the pattern, selling the underlying to buy their own shares, the flow could become procyclical: coins are sold to close stock discounts, selling pressures build, and wider discounts re-emerge as stock filters re-rate to the lower mark – this repeats.
This is the “death spiral” scenario that skeptics warn about when cash assets double as a signal of corporate conviction.
At press time, ETH was trading at $4,156.
Featured image created with DALL.E, chart from TradingView.com
