It’s the digital asset treasure bubble in reverse, as companies once hell-bent on accumulating cryptocurrencies on their balance sheets turn to digital asset sales in an effort to shore up falling stock prices or reduce outstanding debt.
ETHZilla (ETHZ), a Nasdaq-listed company focused on creating a reserve of the second largest cryptocurrency, ether. On Friday night it said it sold $74.5 million worth of tokens from its treasury. It is the second such sale of ETH holdings by the company.
Funds 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 on Friday.
The company sold 24,291 ETH at an average price of $3,068, reducing the company’s holdings to approximately 69,800 ETH worth over $200 million.
ETHZ shares fell 4% on Monday and have lost approximately 96% from their August highs.
The latest move underscores the continued pressure digital asset hoards face. Many public 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 share prices have fallen much more than the value of their underlying crypto.
That discount has made it more difficult, if not impossible, to raise capital to accumulate additional crypto assets, leading some companies to shift to managing liabilities by tapping into their cryptocurrency reserves.
ETHZilla early in the fourth quarter offloaded $40 million worth of ETH, using the proceeds to fund share buybacks. However, the stock has continued to fall and is currently trading below $7 versus the $20 area when the October buyback was announced.
The company said it may continue to raise capital through ETH sales or equity offerings as it works to advance its business plans.
Read more: BitMine buys $300 million in ether, surpassing 4 million ETH treasury milestone
