ETHZilla Stock Crashes 30%, Overshadowing Massive $349M ETH Treasury on Dilution Concerns

Shares of ETHZilla (ETHZ) tumbled close to 30% on Friday after the company revealed a shareholder offering of 74.8 million convertible shares, raising alarm over significant dilution.

The offering, disclosed in a regulatory filing, would increase ETHZilla’s outstanding shares by about 46%, from 164.4 million to 239.3 million. Importantly, the company itself will not receive any proceeds, as the sale comes from existing shareholders converting and offloading their holdings.

The steep decline comes just weeks after ETHZilla—formerly 180 Life Sciences—rebranded as a crypto treasury vehicle. As of now, the Minneapolis-based firm holds 82,186 ETH, valued at approximately $349 million, alongside $238 million in cash. The ether was accumulated at an average price of $3,806.71.

News of the rebranding and sizable treasury initially sparked a rally, pushing ETHZ shares up 80% year-to-date prior to Friday’s pullback. The company has also attracted backing from major players, including Peter Thiel’s Founders Fund, which holds a 7.5% stake. The fund is also invested in Bitmine Immersion Technologies, a firm building its own ether reserves with $250 million in capital.

The selloff came despite strong tailwinds for Ethereum itself. Ether is up 38% year-to-date—beating both bitcoin’s 24% and the CoinDesk 20 Index’s 17%—as growing regulatory clarity in the U.S. has driven institutional adoption of Ethereum as a foundational blockchain.

However, Friday’s steep decline in ETHZ shares diverged from broader market gains. The Nasdaq, S&P 500, and Dow all traded higher after Fed Chair Jerome Powell hinted at a potential September rate cut, while ether rose 9% over the last 24 hours.

The move highlights investor unease over near-term dilution, even as ETHZilla’s balance sheet positions it among the largest corporate holders of ether. While the firm’s long-term strategy appears solid, markets are grappling with whether future upside can outweigh immediate equity dilution.