Nasdaq-listed Ethereum treasury firm ETHZilla Corporation has executed a strategic $40 million sale of its Ether holdings to accelerate share repurchases, marking one of the most aggressive moves yet by a digital asset treasury company to address the persistent discount between its stock price and underlying crypto asset value.
The Palm Beach-based company disclosed Monday that it sold approximately $40 million worth of ETH on October 24, using the proceeds to repurchase roughly 600,000 shares for about $12 million as part of a broader $250 million stock buyback program authorized by its board of directors in August 2025.
Activist Investor Catalyzes Corporate Action
The timing of ETHZilla's announcement appears directly linked to mounting pressure from activist shareholders. Dubai-based trader and real estate developer Dimitri Semenikhin, known online as "Capybara Stocks," disclosed a 2.2% stake in the company just hours before the buyback news broke. Semenikhin, who recently gained notoriety for helping drive Beyond Meat stock to gains exceeding 1,000%, published an open letter urging ETHZilla management to deploy its Ethereum holdings more aggressively to unlock shareholder value.
"Today, I've published an open letter to the company's management, as I believe it has been greatly underutilizing its ability to buy back its shares as part of the already authorized share buyback program," Semenikhin told Decrypt. He argued that his ability to build such a substantial position while shares traded at a steep discount to net asset value represented a missed opportunity for the company itself.
Less than an hour after Semenikhin's letter went public on social media platform X, ETHZilla announced its Ethereum sale and accelerated buyback activity.
Understanding the NAV Discount Challenge
ETHZilla's stock had been trading at a significant discount to its net asset value, a common challenge facing digital asset treasury firms. Net Asset Value represents the per-share value of a company's assets after subtracting liabilities - essentially what each share should theoretically be worth based on the underlying holdings.
When a crypto treasury company's stock trades below its NAV, it signals that the market values the company at less than the sum of its crypto assets and cash. This discount creates a strategic opportunity: by selling some crypto holdings and using the cash to buy back shares, the company can reduce the number of outstanding shares while maintaining substantial crypto exposure, thereby increasing the NAV per remaining share.
"By opportunistically repurchasing shares while our stock is trading below NAV, we plan to reduce the number of shares that are available for stock loan/borrow activity, while increasing the NAV per share of the Company," explained McAndrew Rudisill, ETHZilla's Chairman and CEO.
Market Reaction and Stock Performance
Investors responded enthusiastically to the announcement. ETHZilla shares, trading under the ticker ETHZ, surged 14.5% on Monday to close at $20.65, rebounding from a session low of $19.56. The stock continued climbing in after-hours trading, rising another 9-14% to reach approximately $23.55, according to market data.
The rally comes after a difficult month for ETHZ stock, which had declined following a 10-for-1 reverse stock split announced in mid-October. However, analysts note that the combination of the buyback program and recent strategic partnerships has revitalized investor sentiment.
Substantial Treasury Remains Intact
Despite the $40 million sale, ETHZilla maintains a formidable Ethereum position. The company continues to hold approximately $400 million worth of ETH in its treasury, representing one of the largest corporate Ethereum holdings among publicly traded companies. According to data from EthereumTreasuries.net, this positions ETHZilla as the seventh-largest corporate Ethereum holder.
The company has stated it plans to continue selling ETH to fund additional share repurchases "until the discount to NAV is normalized," suggesting this may be the first of multiple treasury liquidations aimed at closing the valuation gap.
Billionaire Backing and Strategic Partnerships
ETHZilla's aggressive treasury strategy has attracted high-profile institutional support. In August, entities affiliated with billionaire investor Peter Thiel's Founders Fund acquired a 7.5% stake in the company, sending shares soaring more than 207% on the day of the disclosure. Thiel, co-founder of PayPal and Palantir Technologies, has emerged as a significant player in the corporate Ethereum treasury space, also holding a 9.1% stake in BitMine Immersion Technologies.
The company has also been expanding its strategic footprint beyond pure treasury management. Last week, ETHZilla announced a $15 million investment to acquire a 15% stake in Satschel, Inc., the parent company of Liquidity.io, a regulated broker-dealer and digital alternative trading system. The partnership grants ETHZilla exclusive rights to list Ethereum Layer 2 tokens on Liquidity.io's SEC-regulated platform, positioning the company to capitalize on the growing real-world asset tokenization market.
Some market observers suggest this strategic development also contributed to the positive momentum in ETHZ shares this week.
Industry-Wide Pressure on Digital Asset Treasuries
ETHZilla's decision to liquidate treasury holdings for buybacks reflects broader challenges facing the digital asset treasury sector. Many publicly traded companies that have adopted crypto-focused treasury strategies - often pivoting from unrelated businesses - have seen their stocks trade at persistent discounts to NAV, hampering their ability to raise capital and expand holdings through equity offerings.
SharpLink Gaming, which maintains the second-largest Ethereum treasury among public companies, has authorized a $1.5 billion share repurchase program, demonstrating that combining buybacks with crypto liquidity has become a favored strategy for addressing valuation gaps.
Buyback Program Timeline and Mechanics
The $250 million share buyback authorization, approved in August 2025, runs through June 30, 2026. The company has already completed purchases of more than 6 million shares in September prior to this week's announcement, with the latest 600,000-share tranche representing an acceleration of the program.
ETHZilla retains discretion to execute repurchases through open market transactions or privately negotiated deals at prevailing market prices. The company may also utilize Rule 10b5-1 trading plans, which allow repurchases during periods when management might otherwise be restricted from trading.
The remaining $28 million from the Ether sale has been earmarked for additional share repurchases, with management indicating they will continue to balance treasury optimization with shareholder value creation as market conditions evolve.
Final thoughts
As Ethereum continues trading above $4,000 following recent gains, ETHZilla's strategy of converting some crypto exposure into equity buybacks at discounted prices represents a calculated bet that the company's intrinsic value will eventually be recognized by the market.
Whether this aggressive approach successfully narrows the NAV discount - and whether other crypto treasury firms follow suit - will be closely watched as the corporate digital asset sector matures and seeks to demonstrate sustainable value creation beyond simply accumulating cryptocurrency holdings.