US crypto treasury company ETHZilla has sold some of its Ethereum holdings to pay off outstanding debts. This is evident from a recent report to the American stock market watchdog Securities and Exchange Commission (SEC). The sale comes as the crypto market experiences a broad decline in prices.
ETHZilla sold a total of 24,291 Ethereum for a total of $74.5 million. The average selling price was $3,068 per coin. After this transaction, the company still has approximately 69,800 Ethereum on its balance sheet.
Proceeds used for debt repayment
According to the SEC notification, the proceeds from the sale are intended for the redemption of so-called senior secured convertible bonds. These are loans that can be converted into shares under certain conditions. By reducing these debts, ETHZilla aims to strengthen its financial position in a period of increasing market uncertainty.
From biotech company to crypto investor
ETHZilla went through a major strategic change at the end of July. The company then changed its name from 180 Life Sciences Corp and abandoned its focus on biotechnology. Instead, it opted for an investment strategy that revolves entirely around Ethereum.
The change of course followed years of disappointing performance. Since its IPO in 2020, the former biotech company’s shares had fallen in value by more than 99 percent. With the switch to crypto, the company is trying to take a new direction.
Acquisitions outside the crypto sector
In December, ETHZilla announced two acquisitions. The company took a fully diluted 20 percent stake in AI startup Karus, which develops technology for car financing. It also acquired a 15 percent stake in digital mortgage provider Zippy. ETHZilla thus shows that it also wants to be active outside the crypto market.
ETHZilla stock continues to fall
Investors are currently reacting cautiously to the new strategy. ETHZilla shares closed 8.7 percent lower on Monday and are down more than 65 percent this year, according to data from Google Finance.
More and more companies with crypto on their balance sheets
ETHZilla isn’t the only publicly traded company holding digital currencies. According to data from BitcoinTreasuries.NET, more than 190 listed companies now have Bitcoin on their balance sheets. Together they own more than 5 percent of all Bitcoin in circulation.
Ethereum is also increasingly being held by companies. Data from CoinGecko shows that 27 listed companies collectively own approximately 6 million Ethereum. This amounts to approximately 5 percent of the total supply.
Crypto sales increase in declining market
Now that Bitcoin has fallen from its record price of $126,000 in early October and other cryptocurrencies have also fallen in value, more and more companies are choosing to partially sell their crypto assets. This often happens to pay off debts or create extra financial space.
For example, FG Nexus sold more than 10,900 Ethereum at the end of October to finance a share buyback program. In November, Sequans Communications announced that it had sold 970 Bitcoin to redeem half of its outstanding convertible bonds.
Strategy, the first listed company to use Bitcoin as a core part of its cash strategy, also recently raised additional capital. The company sold millions of shares in December, adding nearly $750 million to its cash reserves to cushion the fallout from the crypto market downturn.
Recent developments show that companies are increasingly actively adapting their crypto strategy as the market remains volatile and uncertainty persists.
Source: https://newsbit.nl/ethzilla-verkoopt-ethereum-om-schulden-af-te-lossen-tijdens-cryptomarktdaling/
