ETHZilla sells $40M in Ethereum to fund stock buy out while activist investor applies pressure.

The treasury company of Ethereum listed on Nasdaq, ETHZilla Corporation, has made a strategic sale of $40 million of its Ether holdings to accelerate the buy out of shares, marking one of the most aggressive moves by a digital asset treasury company to address the persistent discount between the price of its shares and the underlying value of the crypto assets.

The Palm Beach-based company revealed on Monday that it sold approximately $40 million in ETH on October 24, using the proceeds to buy back approximately 600,000 shares for about $12 million as part of a share buyback program of $250 million authorized by its board of directors in August 2025.

The activist investor catalyzes corporate action

The timing of the announcement of ETHZilla seems to be directly linked to the increasing pressure from activist shareholders. Dubai-based trader and real estate developer Dimitri Semenikhin, known online as “Capybara Stocks,” revealed a 2.2% stake in the company just hours before the news of the buy out was made public. Semenikhin, who recently gained notoriety for helping to drive Beyond Meat's stock to gains exceeding 1000%, published an open letter urging ETHZilla's management to deploy its holdings of Ethereum more aggressively to unlock shareholder value.

“Today, I have published an open letter to the company's management, as I believe it has been severely underutilizing its ability to buy back its shares as part of the already authorized buyback program,” said Semenikhin. He argued that its ability to build such a substantial position while the shares were trading at a deep discount to the net asset value represented a missed opportunity for the company itself.

Less than an hour after Semenikhin's letter became public on a social media platform, ETHZilla announced its sale of Ethereum and accelerated its buy out activity.

Understanding the NAV discount challenge

The shares of ETHZilla had been trading at a significant discount to the net asset value, a common challenge faced by digital asset treasury companies. The Net Asset Value represents the per-share value of a company's assets after deducting liabilities, that is, what each share should theoretically be worth based on the underlying holdings.

When the shares of a cryptocurrency treasury company are trading below their NAV, it indicates that the market values the company at less than the sum of its cryptocurrency and cash assets. This discount creates a strategic opportunity: by selling some cryptocurrency holdings and using the cash to buy back shares, the company can reduce the number of shares outstanding while maintaining substantial cryptocurrency exposure, thus increasing the NAV per remaining share.

“By strategically buying back shares while our stock value trades below NAV, we plan to reduce the number of shares available for lending/stock borrowing, while increasing the NAV per share of the company,” explained McAndrew Rudisill, president and CEO of ETHZilla.

Market reaction and stock performance

Investors responded enthusiastically to the announcement. Shares of ETHZilla, traded under the symbol ETHZ, rose 14.5% on Monday to close at $20.65, recovering from a session low of $19.56. The shares continued to climb in after-hours trading, increasing another 9-14% to reach approximately $23.55, according to market data.

The rebound comes after a difficult month for ETHZ shares, which had declined following a 10-for-1 reverse stock split announced in mid-October. However, analysts point out that the combination of the buyout program and recent strategic alliances has revitalized investor sentiment.

Substantial treasury remains intact

Despite the sale of $40 million, ETHZilla maintains a formidable position of Ethereum. The company continues to hold approximately $400 million in its treasury, representing one of the largest corporate holdings of Ethereum among publicly traded companies. According to data from a specialized platform, this positions ETHZilla as the seventh largest corporate holder of Ethereum.

The company has stated that it plans to continue selling ETH to finance additional stock buybacks “until the discount to NAV normalizes,” suggesting that this could be the first of multiple treasury liquidations aimed at closing the valuation gap.

Support from the billionaire and strategic alliances

ETHZilla's aggressive treasury strategy has attracted high-profile institutional support. In August, entities affiliated with billionaire Peter Thiel's Founders Fund acquired a 7.5% stake in the company, causing shares to rise over 207% on the day of the disclosure. Thiel, co-founder of PayPal and Palantir Technologies, has emerged as a significant figure in the corporate treasury space of Ethereum, 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 an investment of $15 million to acquire a 15% stake in Satschel, Inc., the parent company of Liquidity.io, a regulated broker and alternative digital trading system. The alliance grants ETHZilla exclusive rights to list Ethereum Layer 2 tokens on the SEC-regulated platform of Liquidity.io, positioning the company to capitalize on the growing market for tokenization of real-world assets.

Some market observers suggest that this strategic development also contributed to the positive momentum in ETHZ stocks this week.

Pressure across the industry on digital asset treasuries

ETHZilla's decision to liquidate treasury holdings for buyouts reflects the broader challenges facing the digital asset treasury sector. Many publicly traded companies that have adopted cryptocurrency-focused treasury strategies - often pivoting from unrelated businesses - have seen their stocks trade at persistent discounts to NAV, hindering their ability to raise capital and expand holdings through stock offerings.

SharpLink Gaming, which holds the second largest Ethereum treasury among public companies, has authorized a $1.5 billion stock buyback program, demonstrating that combining buyouts with cryptocurrency liquidity has become a favored strategy to address valuation gaps.

Repurchase program schedule and mechanics

The authorization for the buy out program of $250 million, approved in August 2025, extends until June 30, 2026. The company has already completed purchases of over 6 million shares in September before this week's announcement, with the last tranche of 600,000 shares representing an acceleration of the program.

ETHZilla maintains discretion to execute buy outs through open market transactions or privately negotiated agreements at prevailing market prices. The company may also utilize Rule 10b5-1 trading plans, which allow buy outs during periods when management might otherwise be restricted from trading.

The remaining $28 million from the sale of Ether have been reserved for additional buyouts, with the direction indicating that they will continue to balance treasury optimization with value creation for shareholders as market conditions evolve.

Final thoughts

As Ethereum continues to trade above $4,000 following recent gains, ETHZilla's strategy of converting some cryptocurrency exposure into buy outs of discounted stock represents a calculated bet that the intrinsic value of the company will eventually be recognized by the market.

If this aggressive approach succeeds in reducing the NAV discount, and if other cryptocurrency treasury companies follow suit, it will be closely watched as the corporate sector of digital assets matures and seeks to demonstrate sustainable value creation beyond simply accumulating cryptocurrency holdings.