It’s the digital asset cash flow bubble in reverse, as companies once determined to accumulate cryptocurrencies on their balance sheets turn to selling digital assets in an effort 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. said Friday evening that it had sold $74.5 million worth of tokens from its treasury. This is the second sale of this type of ETH asset by the company.
Funds from this latest sale are intended to repurchase outstanding senior secured convertible notes under the terms of an agreement signed earlier this month, according to a Friday regulatory filing.
The company sold 24,291 ETH at an average price of $3,068, bringing its holdings down to approximately 69,800 ETH worth over $200 million.
ETHZ shares were down 4% on Monday and have lost about 96% from their August highs.
The latest maneuver highlights the continued pressure facing digital asset treasuries. Many public companies that raised money 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 their underlying crypto.
This reduction has made it more difficult, if not impossible, to raise capital to accumulate additional crypto assets, leading some companies to shift to liability management by dipping into their crypto reserves instead.
At the start of the fourth quarter, ETHZilla released $40 million in ETH, then using the proceeds to fund share buybacks. The stock, however, continued to fall, currently trading below $7 compared to $20 when the October buyback was announced.
The company said it may continue to raise capital through ETH sales or stock offerings while working to advance its business plans.
Read more: BitMine Buys $300 Million in Ether, Crossing Milestone of 4 Million ETH in Cash
