Ethereum-focused treasury company ETHZilla has sold approximately $40 million worth of ETH to fund an ongoing share buyback program, drawing mixed reactions from investors and analysts. The firm said the move aims to narrow what it calls a “significant discount to NAV,” but critics warn it could set a risky precedent for other crypto treasuries.
ETHZilla Converts ETH Holdings for Share Repurchases
In a statement released Monday, ETHZilla confirmed that since October 24, it has repurchased around 600,000 common shares for roughly $12 million, under an authorized program of up to $250 million. The company said it plans to continue buybacks while its shares trade below net asset value (NAV).
CEO McAndrew Rudisill explained that the sales were not a sign of reduced confidence in Ethereum but rather a balance-sheet strategy.
“We are leveraging our ETH holdings to execute share repurchases,” Rudisill stated. “The transactions are immediately accretive to remaining shareholders.”
ETHZilla reiterated on X (formerly Twitter) that it continues to hold ~$400 million in ETH and carries no net debt, calling the buyback a move to “support shareholders,” reduce short borrow availability, and “drive up NAV per share.” The firm also attributed part of the price pressure to “concentrated short selling” of its stock.
Market Debate: Strategic or Risky?
The logic behind ETHZilla’s move is straightforward: when a crypto treasury’s stock trades below its underlying asset value, repurchasing shares with “coin-cash” could theoretically lift NAV per share. However, this approach has sparked debate because it involves selling ETH — potentially undermining confidence in Ethereum’s long-term reserve narrative.
Popular crypto trader SalsaTekila called the move “extremely bearish,” warning that similar actions by other Ethereum treasuries could trigger a “death spiral” dynamic.
“If treasury companies start dumping ETH to buy their own stock, it’s a dangerous setup,” he posted on X.
Analyst Dan Smith raised questions about ETHZilla’s funding choice, noting that the company reportedly held $569 million in cash as of last month. “Why not just use cash?” he asked, suggesting that selling ETH instead might signal hesitation about Ethereum’s near-term performance.
Retail Attention and Investor Interest
Despite the controversy, ETHZilla has caught the attention of retail investors and prominent traders. According to Business Insider, investor Dimitri Semenikhin — known for his involvement in the Beyond Meat rally — disclosed a 2% stake in ETHZilla. He described the company as trading at a “50% discount to modified NAV,” arguing that markets mispriced its assets due to legacy biotech accounting entries.
ETHZilla reportedly holds around 102,300 ETH and $560 million in cash, which translates to about $62 per share in liquid assets. The company recently completed a 1-for-10 reverse split on October 15 to improve share structure and visibility. Semenikhin pointed to November 13 as a potential catalyst date for updated financial results reflecting the firm’s pivot to digital assets.
Contagion Concerns in Ethereum Markets
Although ETHZilla’s $40 million ETH sale is small relative to Ethereum’s daily trading volume, analysts warn of second-order risks if other Ethereum treasuries adopt similar tactics. The concern is that a cycle of ETH sales to finance equity buybacks could create a self-reinforcing downward loop — where coins are sold to close NAV discounts, pressuring spot prices, and causing equity discounts to reappear.
Such behavior could amplify volatility in Ethereum markets, especially if multiple treasury firms follow the same model. Traders caution that while ETHZilla’s move may seem financially rational in isolation, the broader behavioral signal could weigh on investor sentiment.
ETH Market Reaction
Ethereum (ETH) prices have remained largely stable following the news, with the token trading near $3,100 at press time, according to CoinGecko. Still, observers note that the story highlights how treasury management decisions are increasingly influencing crypto market structure — a sign of Ethereum’s growing financialization.
For now, ETHZilla maintains that its buyback strategy is not a retreat but an effort to enhance shareholder value. Whether the market interprets it that way—or as an early sign of stress among Ethereum treasuries—remains to be seen.
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