After $400M splurge, ETH treasurer eyes stock buyback amid leverage concerns

Ether treasury company ETHZilla, which recently pivoted from its biotechnology roots to cryptocurrency, has approved a $250 million share repurchase program — signaling that some firms may increasingly tap digital-asset gains as a source of liquidity.

ETHZilla’s board of directors authorized the buyback of up to $250 million worth of its outstanding common shares, the company disclosed Monday. The company currently has 165.4 million shares outstanding.

The move comes less than a month after the firm rebranded from 180 Life Sciences and made Ether (ETH) its core strategy — a pivot that helped revive its beaten-down stock

ETHZilla’s stock price can clearly be seen benefiting from its new ETH treasury focus. Source: Google FinanceETHZilla has since acquired 102,237 ETH at an average price of $3,948.72, spending just over $403 million. At current market levels, those holdings are worth about $489 million. The company said its most recent ETH purchases will be staked with Electric Capital.

Management’s language around the repurchase echoed classic triggers, citing “market conditions,” “management discretion,” and “alternative uses of capital.”

ETHZilla’s new strategy comes against a backdrop of weak fundamentals. As a public company, it has struggled with limited revenues, persistent losses and shareholder dilution. Last year alone, it reported an accumulated deficit of over $141.5 million.

ETHZilla is not alone in embracing crypto as a balance-sheet asset. Companies both inside and outside the digital-asset sector — including BitMine Immersion Technologies, The Ether Machine, SharpLink Gaming, Bit Digital and Ether Capital Corp. — have all made strategic Ether acquisitions.

Source: Tom Lee TrackerRelated: Ether treasuries climb to $13B as price breaks $4,300

Leverage and concentration risks

Analysts see parallels between today’s “crypto treasury” plays and earlier waves of corporate gold adoption, but warn that leverage-fueled balance sheet builds remain a major risk. Companies that borrow heavily to accumulate crypto could face worsening financials if — or when — another bear market hits.

Mike Foy, chief financial officer at Amina Bank, told Cointelegraph that it’s still too early to tell whether crypto-treasury strategies are sustainable in the long run. In the meantime, he said it’s important to determine whether companies are pursuing the approach for speculative gains, signaling purposes or as part of a broader strategic plan.

“If any of these [purchases] seem strange or out of the ordinary, then this is possibly a sign that this isn’t a long-term plan but rather a short-term share price play,” Foy said.

Kadan Stadelmann, chief technology officer at Komodo Platform, drew parallels between ETH-treasury firms and spot exchange-traded funds (ETFs), noting that the former can offer benefits that ETFs cannot. “Spot ETFs cannot legally offer staking and DeFi,” he said. “Ethereum treasury firms offer higher yields.”

Source: FabdariceStill, Stadelmann cautioned that the model carries significant risks. “ETH treasury firms have risks, such as overleveraging,” he said. In a bear market, this could trigger forced liquidations, potentially creating cascading effects on Ether’s price.

Falling ETH prices could undermine debt-financed strategies at companies that acquired their holdings through loans, convertible notes or equity dilution.

Of the current digital asset treasury strategies, Ether is the most exposed, with roughly 3.4% of its total supply held by such entities, according to Anthony DeMartino, founder and CEO of Sentora Research.

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