After selling off most of its crypto assets over the past few months, Ethereum-focused financial firm ETHZilla has now added a jet engine to its balance sheet.
The company purchased two CFM56-7B24 aircraft engines through newly formed subsidiary ETHZilla Aerospace LLC for $12.2 million, according to a filing with the U.S. Securities and Exchange Commission (SEC) on Friday.
The engines are currently leased to a major airline, and ETHZilla hired Aero Engine Solutions to manage them in exchange for monthly payments, the filing said. The deal includes a buy-sell option agreement in which either party can require the other to buy or sell the engines at $3 million per unit after the lease expires, provided the engines are kept in good condition.
While the move may sound strange, for an ETH financial company, purchasing jet engines and leasing them to aircraft operators is part of normal aerospace business outside of the cryptocurrency world.
Airline operators lease jet engines as spare parts to ensure that aircraft can continue operating without interruption if the main engine fails. Companies such as AerCap, Willis Lease Finance Corporation and SMBC Aero Engine Lease are operating in this area.
The aerospace industry is also currently facing tight supply of large engines, with the International Air Transport Association saying its airline members will be forced to pay about $2.6 billion to lease additional spare engines by 2025. In fact, according to TechSci Research, the global aircraft engine leasing market is expected to grow from US$11.17 billion in 2025 to US$15.56 billion in 2031, representing a compound annual growth rate of 5.68%.
Tokenization pivot
The bizarre move comes as the digital asset treasury has come under increasing pressure as cryptocurrency markets have plummeted over the past few months.
Many public companies that aggressively raised capital last year to accumulate tokens are now trading well below the net asset value (NAV) of the cryptocurrencies on their books, leaving little room to raise new capital.
ETHZilla previously sold $40 million of ETH in October to fund a stock buyback program, and then sold another $74.5 million in December to redeem outstanding debt. Meanwhile, its shares have fallen about 97% since their peak in August.
Nonetheless, purchasing aircraft engines may be part of ETHZilla’s broader ambitions to bring tokenized real-world assets (RWA) on-chain.
In a December shareholder letter, the company outlined plans to tokenize assets in partnership with Liquidity.io, a regulated broker-dealer and SEC-registered alternative trading system (ATS). Previously, ETHZilla held a 15% stake in Zippy, a lender focused on making home loans, with plans to tokenize these loans into compliant tradable instruments. It also acquired a stake in car finance platform Karus and plans to bring lending on-chain.
“We are building a scalable tokenization pipeline across asset classes with predictable cash flow and global investor demand,” the company said in a post on Wednesday. It expects to list its first tokenized asset products in the first quarter of this year.
