ETHZilla Stock Sinks 30% on Dilution Fears Despite $349M Ethereum Treasury
ETHZilla (ETHZ) shares plunged nearly 30% on Friday after the recently rebranded crypto treasury firm disclosed a shareholder-led offering of up to 74.8 million convertible shares, raising significant dilution concerns despite the company’s sizable holdings in ether and cash.
The stock selloff followed a regulatory filing indicating that the company’s outstanding share count could rise 46%, from 164.4 million to 239.3 million, if all convertible shares are issued. Importantly, ETHZilla will not receive any proceeds from this secondary sale, as the shares are being offered by existing shareholders.
The announcement rattled investors, who fear the dilution effect—where a larger number of shares reduces each existing investor’s proportional ownership and earnings per share, even if the company’s overall value remains unchanged.
Formerly known as 180 Life Science, ETHZilla recently pivoted from biotech to become a dedicated crypto treasury entity. Earlier this month, the firm revealed it holds 82,186 ETH, valued at approximately $349 million, and $238 million in cash equivalents. The average purchase price for its ether holdings is $3,806.71 per token.
News of the company’s strategic shift and sizable digital asset holdings sent its stock soaring earlier in August, pushing year-to-date gains to 80% prior to Friday’s sharp reversal.
The transformation has drawn the attention of major backers, most notably Peter Thiel. His Founders Fund holds a 7.5% stake in ETHZilla and also owns 9.1% of Bitmine Immersion Technologies, which recently raised $250 million to expand its own ether treasury. Thiel’s involvement signals growing institutional belief in Ethereum’s role as a foundational layer for future financial systems.
Meanwhile, ether has staged a strong comeback in 2025, gaining 38% year-to-date—outpacing bitcoin’s 24% rise and the CoinDesk 20 Index’s 17% gain. This marks a reversal from 2024, when ETH underperformed BTC significantly. Analysts attribute the rebound to greater regulatory clarity in the U.S., which has opened the door for Ethereum’s increased use in financial services.
Despite favorable macro conditions—including a 9% surge in ETH and a broad rally in equity markets following dovish comments from Fed Chair Jerome Powell—ETHZilla’s stock bucked the trend on Friday.
The sharp decline reflects growing investor concern about the company’s capital structure. While ETHZilla now ranks among the largest publicly traded ether treasuries, the latest filing has investors questioning whether long-term value can outweigh the short-term risks of dilution.
