ETHZilla spends $12M on two plane engines to advance tokenization push

ETHZilla Corporation has acquired two commercial aircraft engines for more than $12 million, weeks after its executive said it would pursue other business plans while tokenizing real-world assets.

According to regulatory filings, ETHZilla executed two CFM56-7B24 aircraft engine purchases through a newly formed subsidiary, ETHZilla Aerospace LLC. The aircraft engines came with engine records and stands, purchased for a total of $12.2 million in cash from Aero Engine Solutions’ affiliate, Avean. 

Last December, ETHZilla chairman and chief executive McAndrew Rudisill said the company plans to “build an operating business to bring real-world assets (RWA) on-chain through tokenization,” moving away from simply buying and holding Ether.

ETHZilla enters the aerospace engine lease market

As seen in the agreement, the final amount also included deposits and adjustments, setting the economic closing date for September 30 last year. Since the engines were already under lease to another airline at the time of acquisition, those lease agreements were assigned to ETHZilla. 

The engines are subject to Aircraft Engine Lease Agreements with a large airline operator. Airlines frequently lease spare engines to avoid disruptions if an aircraft’s primary engine requires maintenance or unexpected replacement.

This leasing model has become a specialized financial niche dominated by firms that own engines outright and lease them to carriers worldwide. Some of the firms in this market include AerCap, Willis Lease Finance Corporation, and SMBC Aero Engine Lease.

According to the International Air Transport Association, the global aerospace industry is currently facing a significant shortage of engines. The IATA has warned that airlines will be forced to spend about $2.6 billion in 2025 alone to lease more spare engines to keep their business running.

TechSci’s market research, cited in ETHZilla’s submission with the US Securities and Exchange Commission (SEC), shows the aircraft engine leasing market could grow by a compound annual growth rate of 5.68%, from $11.17 billion in 2025 to $15.56 billion by 2031.

In connection with the purchase, ETHZilla entered into a Servicing Agreement with Aero Engine Solutions. The two entities agreed to let the servicer manage the engines throughout the duration of their existing leases. The arrangement also includes a monthly servicing fee and a set of reciprocal purchase options following lease expiration or early termination.

ETHZilla has the option, but not the obligation, to call upon the servicer or a related party to purchase either of the engines at the end of the lease. It also applies upon early termination of the lease of a particular engine if that engine meets the conditions of this contract for $3 million per engine.

The servicer also holds a mirrored right to require ETHZilla to sell either engine for $3 million per engine under the same conditions. ETHZilla noted that the description of the Purchase Agreement is subject to and qualified entirely by the full agreement filed as an exhibit.

Company diversifies RWA tokenization through aerospace

In last year’s commentary, Rudisill told investors that the company would “initially focus on aerospace assets such as aircraft engines and airframes to tokenize.” He also mentioned that members of ETHZilla’s board have “relationships within the aerospace industry” being used to source assets, so there was no need for external partnerships.

ETHZilla had also acquired a 15% stake in home lending service provider Zippy, aiming to tokenize loans as tradable instruments in line with SEC regulations. It also took a stake in auto finance platform Karus, with similar plans to bring vehicle-related loans on-chain.

Although it currently holds $198.5 million in ETH, ETHZilla sold $40 million worth of Ether in October to fund a stock buyback program and another $74.5 million in ETH to redeem outstanding debt last month. Its shares surged above $100 in August during the peak of the crypto-linked equity rally, but they have since dropped 95% to close at $5.24 on Friday, according to Google Finance data.

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