It’s the digital wealth bubble in reverse, as companies once determined to accumulate crypto on their balance sheets turn to digital asset sales in an attempt to either prop up falling stock prices or reduce outstanding debt.
ETHZilla (ETHZ), a Nasdaq-listed company focused on building a reserve of the second largest cryptocurrency, ether late Friday said it sold $74.5 million worth of tokens from its treasury. It is the company’s second such sale of ETH holdings.
The funds from this latest sale are intended to redeem outstanding senior secured convertible bonds 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, bringing the company’s holdings down to around 69,800 ETH, worth more than $200 million.
ETHZ shares were lower by 4% on Monday and have lost about 96% from their August highs.
The latest maneuver underscores the ongoing pressures facing digital assets. 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 far more than the value of their underlying crypto.
This discount has made it more difficult, if not impossible, to raise capital to accumulate additional crypto assets, prompting some companies to shift to managing liabilities by dipping into their crypto reserves instead.
ETHZilla unloaded $40 million in ETH earlier in the fourth quarter, using the proceeds to fund share buybacks. However, the stock has continued to decline and is currently trading below $7 against the $20 range since the October buyback was announced.
The company said it may continue to raise capital by selling ETH or equity offerings as it works to advance its business plans.
Read more: BitMine buys $300 million in ether and crosses 4 million ETH treasury milestone
