ETHZilla turns aircraft engines into strategic assets, shifting towards real asset tokenization amid headwinds in the crypto market

Ethereum-focused financial management company ETHZilla has made a bold business pivot amid the downturn in the crypto market. According to documents filed with the SEC (U.S. Securities and Exchange Commission), the company acquired two CFM56-7B24 aircraft engines for $12.2 million through its newly established subsidiary ETHZilla Aerospace LLC. This decision can be interpreted not merely as asset diversification but as part of a major strategic shift toward tokenizing tangible assets on the blockchain.

Pressure from the Crypto Market and Reorganization of Asset Portfolio

Over the past few months, ETHZilla has been forced to significantly sell off its crypto holdings. In October, it sold ETH worth $40 million to fund a share buyback program, and in December, it sold an additional $74.5 million to repay debts. The company’s stock price has fallen approximately 97% from its peak in August.

Under such market conditions, many crypto companies face vulnerabilities in their digital asset-centric business models. The net asset value of their crypto holdings on the books is not reflected in their stock prices, limiting avenues for new capital raising. ETHZilla’s decision appears to be a response to these structural challenges.

Why Aircraft Engines Are an Ideal Choice for a Physical Asset Portfolio

At first glance, the purchase of aircraft engines by a crypto company may seem unusual. However, the aircraft engine leasing market is a highly practical asset class that generates predictable cash flows.

Major airlines lease spare engines to prepare for potential failures of their main engines, and specialized firms such as AerCap, Willis Lease Finance Corporation, and SMBC Aero Engine Lease operate in this market. The aircraft engines owned by ETHZilla are currently leased to large domestic airlines, providing a stable revenue stream through monthly payments.

According to statistics from the International Air Transport Association (IATA), airlines are expected to spend approximately $2.6 billion on additional engine leases in 2025, and the global aircraft engine leasing market is projected to grow from $11.17 billion in 2025 to $15.56 billion in 2031. The compound annual growth rate (CAGR) is 5.68%, supported by demand pressures due to supply shortages.

Full-Scale Deployment of Asset Tokenization

The purchase of aircraft engines is a realization of ETHZilla’s broader ambitions. In a shareholder letter in December, the company announced its plan to build a tokenization pipeline for assets and revealed a partnership with Liquidity.io, a regulated broker-dealer and SEC-registered ATS (Alternative Trading System).

Its strategy is multifaceted. ETHZilla acquired a 15% stake in Zippy, a lender specializing in mortgages, and plans to tokenize residential mortgages as compliant, tradable financial products. Simultaneously, it invested in the auto-finance platform Karus to promote on-chain auto loans.

“We are building a scalable tokenization pipeline across asset classes that generate predictable cash flows and meet global investor demand,” ETHZilla stated, aiming to create a new business model through the integration of real-world assets (RWA) financialization and tokenization.

This strategic shift may symbolize the evolution of the crypto industry from merely managing digital assets to providing infrastructure that integrates traditional financial assets on the blockchain.