ETHZilla Mirrors Bitcoin's Playbook to Tighten Ethereum Supply

ETHZilla, a Nasdaq-listed decentralized finance technology firm, has raised an additional $350 million through convertible debentures, bringing its total capitalization to over $506 million. The funding, secured from an existing institutional investor, will be allocated to expand Ethereum (ETH) holdings, invest in Ethereum scaling protocols, and tokenize real-world assets to generate yield. The new debentures carry a 2% annual interest rate, with a conversion price set at $3.05 per share, while previously issued $156.5 million in debt will remain interest-free until February 2026 before reverting to a 2% rate, down from the original 4%ETHZilla Corporation (ETHZ) Stock: Gains Momentum with $350M …^[4]. CEO McAndrew Rudisill emphasized the company’s scalable business model, leveraging fixed operating leverage and recurring cash flow to drive growthETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[5].

The firm’s balance sheet now includes 102,264 ETH (worth $462 million), $559 million in cash and U.S. Treasuries, and 1.5 million earned protocol tokens from Ethereum staking and ecosystem participationETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[5]. ETHZilla’s strategy combines passive ETH accumulation with active deployment into Layer-2 protocols and tokenized assets, aiming to enhance liquidity and diversify revenue streams. The company has already earned 1.5 million unnamed tokens through its ecosystem investmentsETHZilla Corporation (ETHZ) Stock: Gains Momentum with $350M …^[4].

ETHZilla’s move aligns with a broader trend of digital asset treasuries (DATs) consolidating control over Ethereum’s supply. Currently, DATs hold 4.34% of the circulating ETH supply, with ETHZilla ranking as the eighth-largest treasury among 69 listed entitiesETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[5]. This corporate-driven accumulation mirrors strategies pioneered by Bitcoin-focused firms, which historically tightened supply and supported price appreciation during previous cycles. The firm’s management introduced non-traditional metrics like ETH Net Asset Value (NAV) and Market Net Asset Value (mNAV) to reflect its crypto-centric balance sheet, though these measures are explicitly noted as distinct from conventional NAV calculationsETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[5].

The funding coincides with Ethereum’s evolving ecosystem, where 30% of the total supply is staked, creating a liquid supply squeezeETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[5]. ETHZilla’s hybrid approach—balancing ETH accumulation with yield generation through Layer-2 and tokenization—positions it to capitalize on Ethereum’s growth while mitigating volatility risks. The company plans to provide further guidance on its capital allocation strategy during its third-quarter earnings reportETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[5].

Despite the aggressive funding, ETHZilla’s stock performance has been mixed. Since its 2020 IPO, the stock has declined by over 99% in five years, though it has gained 31% year-to-date, peaking at $10.70 in August 2025ETHZilla Corporation (ETHZ) Stock: Gains Momentum with $350M …^[4]. Recent share buybacks, totaling 6.45 million shares in September alone, signal management’s confidence in the stock’s undervaluationETHZilla Raise $350M: Will Cash + ETH Wipe Out Debt Load?^[6]. The firm’s revised debt structure, including reduced interest costs, is expected to improve cash flow flexibility and support long-term capital efficiencyETHZilla Corporation (ETHZ) Stock: Gains Momentum with $350M …^[7].

ETHZilla’s expansion underscores growing institutional confidence in Ethereum’s ecosystem. As the firm deepens its involvement in Layer-2 projects and real-world asset tokenization, it aims to bridge traditional finance and decentralized infrastructure, positioning itself as a key player in Ethereum’s next phase of adoptionETHZilla Files for $350M Funding as Digital Asset Treasuries Grow^[8].