This is a reversal of the digital asset bond bubble, where companies once eager to accumulate cryptocurrencies on their balance sheets turned to selling digital assets to support plunging stock prices or reduce outstanding debt.
ETHZilla (ETHZ) is a Nasdaq-listed company focused on building reserves for Ether, the second largest cryptocurrency. Ethereum$3,042.57late Friday, the company announced it had sold $74.5 million worth of tokens from the Treasury Department. This is the second time the company has sold its ETH holdings.
The proceeds from this latest sale are intended to redeem outstanding senior secured convertible notes under the terms of an agreement signed earlier this month, according to a regulatory filing Friday.
The company sold 24,291 ETH at an average price of $3,068, reducing its holdings to approximately 69,800 ETH, worth more than $200 million.
ETHZ stock fell 4% on Monday and is down about 96% from its August high.
The move highlights the continuing pressures facing digital asset bonds. Many publicly traded companies that raised funds to buy digital assets earlier this year are now trading below the net asset value (NAV) of their holdings, as their stock prices have fallen far more than the value of the underlying cryptocurrencies.
This discount has made it difficult, if not impossible, to raise capital to accumulate additional crypto assets, leading some companies to move to debt management by drawing down crypto assets instead.
ETHZilla unloaded $40 million of ETH early in the fourth quarter and used the proceeds to fund a share buyback. However, the stock price has continued to decline and is currently trading below $7, compared to around $20 when the share buyback was announced in October.
The company stated that it may continue to raise funds through the sale of ETH and shares to advance its business plan.
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