ZeroStack's Future in Question Following $82.5M Cryptocurrency Writedown
The publicly-traded company depends primarily on staking income to maintain its operations, as its 0G token position currently sits 91% underwater compared to acquisition costs.
Publicly-traded cryptocurrency treasury firm ZeroStack has cautioned that significant uncertainty surrounds its capacity to maintain operations throughout the coming year, marking a dramatic shift from its outlook just one quarter prior.
Through a Form 10-Q submission to the US Securities and Exchange Commission (SEC) made public on Friday, ZeroStack disclosed cash reserves of $2.6 million, working capital deficit of $600,000, and an accumulated loss totaling $339.1 million at the close of June 30. The firm additionally recorded an $82.5 million markdown on its digital asset portfolio and reported a net loss reaching $61.3 million during the initial six months of 2026.
According to ZeroStack's filing, its position of 75.1 million Zero Gravity (0G) tokens carried a cumulative acquisition cost of $163.3 million while maintaining a fair market value of just $15.2 million at June 30, resulting in the portfolio being valued approximately 91% beneath its original purchase price.
The company's operational funding model centers on staking income and token liquidations, creating a situation where its cash-raising capability remains contingent upon the market price of 0G and available trading volume.
ZeroStack's 0G strategy faces a liquidity test
During the year's first six months, ZeroStack documented $3.8 million in revenue generated through staking activities, accumulating approximately 6.6 million 0G tokens following validator commission deductions. The company liquidated close to 4.9 million tokens, generating $2.4 million to support its operational expenditures.
Management indicated that projected operating costs should be covered by available cash combined with proceeds from staking reward liquidations, and noted the option to divest portions of its treasury reserves if circumstances require. Nevertheless, company leadership acknowledged their inability to definitively conclude that these strategies would sufficiently address concerns regarding operational continuity.
This current evaluation represents a complete reversal from the company's stance in its two most recent regulatory filings. During its first-quarter submission, ZeroStack maintained that available cash combined with staking income would adequately satisfy its working capital needs and financial commitments for no less than the following twelve months.
The business previously operated as Flora Growth, a company focused on cannabis and CBD product distribution. On Sept. 19, Flora disclosed a $401 million capital raise dedicated to implementing a 0G treasury-focused strategy, composed of $35 million in cash and equivalent financial commitments alongside more than $366 million represented by in-kind contributions of digital assets. Following this transaction, the company executed a corporate rebrand to ZeroStack while maintaining its existing Nasdaq stock exchange listing.