ETHZilla’s Revised Debenture Deal Could Strengthen Balance Sheet Backed by Ethereum Holdings

• Existing debentures stay 0% until 6 Feb 2026, then 2% thereafter.

• New $350M convertible debentures issued at a 2% annual rate.

• Company holds 102,264 ETH (~$462M) and $559M in cash and U.S. Treasuries—supporting liquidity and yield generation.

ETHZilla convertible debentures amended: 0% until Feb 2026 then 2%; $350M new issuance bolsters balance sheet and yield strategy — read the update.

What are ETHZilla’s convertible debentures and how were they changed?

ETHZilla convertible debentures are debt instruments that convert into equity under specified terms. The amended agreement keeps the previously issued $156.5 million at 0% interest until 6 February 2026, then reduces the coupon to 2% annually; a new $350 million tranche was issued at 2%.

How does the amended debenture agreement change ETHZilla’s financing?

The amendment expands access to institutional capital while lowering cash interest costs. Existing debentures will not incur cash interest through early 2026, reducing near-term financing stress. The new $350 million issuance at 2% provides immediate liquidity to support operations and strategic deployments.

How will the revised terms affect ETHZilla’s balance sheet and liquidity?

The deal materially strengthens ETHZilla’s balance sheet. As of the update, the company holds 102,264 ETH (approximately $462 million), plus $559 million in cash and U.S. Treasuries. These holdings, together with earned protocol tokens and active share repurchases, provide runway to support the 2% coupon payments and strategic deployments.

What portfolio metrics and strategies support the yield on these debentures?

ETHZilla intends to capture excess interest from an interest-bearing portfolio of roughly $500 million to cover coupon costs and finance operations. The company also plans to deploy ETH into Layer 2 scaling protocols and to pursue tokenization of real-world assets to generate recurring cash flow.

CEO McAndrew Rudisill commented: “As we pursue our strategy of deploying ETH into Layer 2 protocols and tokenizing real-world assets to generate free cash flow on the Ethereum network, we are providing transparency into ETHZilla’s mNAV and the methodology behind the calculation.”

He added: “We believe our business model is highly scalable, with significant fixed operating leverage and recurring positive cash flow. We plan to provide guidance for the remainder of 2025 in our Q3 earnings release.”

When did ETHZilla reduce its outstanding shares and how does that impact investors?

In September, ETHZilla repurchased approximately 6.45 million shares, reducing outstanding stock by about 0.3%. Share repurchases can modestly increase per-share metrics and signal management confidence, while maintaining capital allocation flexibility alongside the new debenture financing.

What are ETH NAV and mNAV, and how should investors interpret them?

ETH NAV and Market NAV (mNAV) are proprietary metrics ETHZilla introduced to track its digital asset portfolio. Management notes these are unconventional measures and should not be equated to traditional net asset value calculations. They are intended as internal transparency tools to reflect ETH exposure and market-adjusted positions.

Frequently Asked Questions

Will existing debenture holders receive interest before February 2026?

No. Existing $156.5 million convertible debentures remain at 0% interest until 6 February 2026. Interest will begin accruing at 2% annually after that date.

How does ETHZilla plan to pay the 2% coupon on new and amended debentures?

ETHZilla expects to use yield from its roughly $500 million portfolio of interest-bearing securities, plus cash and U.S. Treasuries, to meet coupon obligations while deploying ETH into yield-generating Layer 2 protocols.

Key Takeaways

• Preserved short-term cash flow: Existing $156.5M debentures at 0% until 6 Feb 2026 reduce near-term interest payments.
• New liquidity: $350M in new convertible debentures at 2% strengthens the balance sheet for strategic deployments.
• Backed by assets: Holdings include 102,264 ETH (~$462M), $559M in cash and U.S. Treasuries, and earned protocol tokens—supporting coupon coverage.

Conclusion

ETHZilla’s amended convertible debenture structure and $350 million issuance improve near-term liquidity while keeping funding costs modest at 2%. The financing is supported by a substantial asset base—ETH holdings, cash, and Treasuries—and a yield-focused strategy emphasizing Layer 2 deployments and tokenization of real-world assets. COINOTAG will monitor upcoming Q3 disclosures for updated guidance and metrics.