Shares of ETHZilla (ETHZ), previously known as biotech company 180 Life Science, dropped almost 30% on Friday after the firm announced that shareholders intended to offer up to 74.8 million convertible shares.
This announcement raised concerns over dilution, which occurs when the stakes of existing shareholders decrease in value as additional stock is introduced to the market. For investors, this signals a reduction in their ownership share, regardless of whether the company’s overall value remains constant.
Post-issuance, the company’s total shares will increase by approximately 46%, climbing from 164.4 million to 239.3 million, as noted in the filing. The company will not receive any funds from shareholders selling their converted shares.
Earlier this month, ETHZilla rebranded into a crypto treasury firm and revealed it possesses 82,186 ether, valued at roughly $349 million based on current prices, in addition to $238 million in cash equivalents. The ether was purchased at an average rate of $3,806.71 per token. This pivot and the scale of holdings propelled shares up on August 11, resulting in an 80% year-to-date increase before the sharp downturn on Friday.
The strategic transition has attracted significant investors.
Peter Thiel, who has publicly endorsed Ethereum, holds a 7.5% stake in ETHZ via his Founders Fund, which also owns 9.1% of Bitmine Immersion Technologies. This company recently raised $250 million to establish its own ether reserves. Thiel’s backing underscores a larger investment trend among influential figures betting on Ethereum’s potential to underpin the next wave of financial systems.
Ether has regained traction in 2025 following a year of underperformance compared to other altcoins. It has seen a 38% increase year-to-date, surpassing bitcoin’s 24% gain and the CoinDesk 20 Index’s increase of 17%. For context, bitcoin surged 121% in 2024, while ether increased by a mere 31%. This resurgence aligns with increased regulatory clarity in the U.S., prompting Wall Street firms to adopt Ethereum as a foundation for new financial products and services.
Despite the price surge and investor interest, ETHZ shares behaved contrary to the broader market on Friday. The Nasdaq, S&P 500, and Dow all rose following comments from Federal Reserve Chair Jerome Powell, while ether saw a 9% gain in the preceding 24 hours.
This selloff illustrates the conflict between ETHZ’s potential as a significant publicly traded ether treasury and investor apprehension about imminent dilution. While the company’s balance sheet ranks it among the largest corporate ether holders, shareholders are contemplating whether that potential can outweigh the risks of diminished stakes.
