Peter Thiel, the billionaire venture capitalist behind Founders Fund, has fully exited his position in Ethereum-focused treasury firm ETHZilla. According to a recent SEC filing, Thiel sold his entire 7.5% stake in the company, a move that has raised eyebrows across the crypto space. This decision follows a drastic 95% collapse in ETHZilla’s stock value, linked to the fall in Ethereum's price, which dropped from nearly $4,900 to around $1,970.
ETHZilla, which originally started as a biotech firm, pivoted in mid-2024 to an Ethereum treasury business model. The company was designed to hold Ethereum as a core asset, offering exposure to the cryptocurrency through public equity shares. At its peak, ETHZilla reportedly held over 100,000 ETH, positioning itself as a corporate vehicle for Ethereum investments.
Struggles of the Ethereum Treasury Model
The Ethereum treasury model, akin to the one used by Bitcoin-focused companies like Strategy, relies on accumulating large amounts of digital assets to boost both corporate value and market exposure. The premise works well in bullish markets, where rising crypto prices boost both the value of the treasury and share prices.
However, this strategy is particularly vulnerable in bear markets. As Ethereum’s price fell sharply, ETHZilla found itself in a precarious position. The company was forced to liquidate parts of its ETH holdings to service debt and repurchase stock, all while trying to diversify its operations. In late 2025, ETHZilla sold over $114 million worth of Ether to stabilize its financials, marking a significant shift away from its original strategy.
Despite these efforts, ETHZilla’s share price continued to plummet, down by 95% from its peak. The company’s struggles suggest that the Ethereum treasury model, at least during times of market downturn, may not be as resilient as initially thought.
Peter Thiel’s Motivations Behind the Exit
While the official reasons for Thiel’s decision to exit remain unclear, several factors likely influenced the move. One possibility is risk management, especially in light of the significant market downturn and the declining value of ETHZilla’s shares. With the company’s stock and Ethereum’s value both in freefall, divesting from ETHZilla could have been a strategy to preserve capital.
Another possible explanation is a growing skepticism about the Ethereum treasury model itself. Thiel has been known for his preference for Bitcoin, which he views as “digital gold.” His skepticism towards Ethereum has been well-documented in the past, with Thiel describing ETH as a “slow-moving albatross.” If he saw Ethereum as more of a speculative asset than a stable store of value, exiting ETHZilla might reflect a lack of confidence in the firm’s long-term viability.
Lastly, Thiel’s exit may be part of a broader strategic reallocation of capital. While Founders Fund sold its ETHZilla stake, it still holds a 4.5% share in BitMine, a competing Ethereum-focused company. This, as we reported, has led to speculation that Thiel is moving his resources to a more promising venture, potentially signaling a shift away from the Ethereum treasury model.
ETHZilla’s Shift to Aerospace and Prospects
After Thiel’s exit, ETHZilla has pivoted to diversify its operations, as Coinpaper reported. The company recently launched ETHZilla Aerospace, a subsidiary focused on tokenized equity in leased jet engines. This move appears to be an attempt to offset its losses and tap into a new market outside of cryptocurrency.
While ETHZilla remains one of the largest public holders of Ethereum, with over 69,000 ETH worth approximately $140 million, the future of its Ethereum treasury model looks uncertain. With the company facing ongoing challenges, including significant debt and declining share prices, it may take time to see if the aerospace pivot will provide the necessary financial stability.
Despite these efforts, the crypto market’s volatility and Ethereum’s price fluctuations continue to weigh heavily on ETHZilla’s prospects. The company's strategy to pivot into aerospace may represent a desperate attempt to diversify, or it could signal a new direction for the company as it seeks stability after a turbulent year.
