Peter Thiel Leads Pack of Investors Piling Into Ether — WSJ

By Gregory Zuckerman and Vicky Ge Huang

Ether, the cryptocurrency long overshadowed by bitcoin, has surged about 13.5% this month. One big beneficiary: billionaire Peter Thiel.

The venture-capital investor has been among those piling into ether, betting that the token's underlying blockchain, Ethereum, could become Wall Street's platform of choice to launch new financial products and services.

Unlike bitcoin, which has limited supply and is largely used as a digital store of value and means of speculation, there is no hard cap on ether's supply. But the digital token is increasingly being used for transactions on Ethereum, an open-source platform where developers build and operate applications that can be used to trade, lend and borrow digital currencies.

Ether is up around 27% so far this year, topping bitcoin's roughly 20% gain. The latest bitcoin rally is partly driven by a new wave of companies issuing shares and debt to stockpile the token as a "treasury" asset. The same thing is now happening with ether.

Thiel was a PayPal founder, an early Facebook investor and is a longtime patron of Vice President JD Vance. An investment firm managing his wealth has scored big paper gains on ether-related bets.

Thiel's Founders Fund owns 7.5% of ETHZilla, which recently transformed itself from a biotech company to focus on selling shares to buy ether. Its stock tripled in value in one day last week after Thiel and his firms disclosed their investment, though it has since fallen some. The company's market value went from about $18 million in late July to $741 million as of Thursday.

Thiel and his firm also control 9.1% of Bitmine Immersion Technologies, which recently raised $250 million to buy ether and is up more than 1,000% since late June. The company now has a market value of $8.3 billion.

Thiel's gains on those investments pale in comparison to the billions of dollars added to the value of his stake in Palantir so far this year. Shares of the software firm he co-founded have soared in President Trump's second term. It couldn't be learned if Thiel has other nonpublic ether investments. He declined to comment.

Three people who have interacted with Thiel and his team say their recent bets stem from a belief that the Ethereum network will keep growing.

"It's a broad play on Ethereum," says McAndrew Rudisill, executive chairman of ETHZilla, who speaks with Thiel's Founders Fund.

The idea is that if Ethereum becomes an alternative to traditional settlement rails for dollars, stocks and more, ether, as its native token, would benefit from increased activity on the platform. Bulls also hope Ethereum will become a popular platform for launching new financial products.

Tokenized money-market funds from BlackRock and Franklin Templeton already operate on the Ethereum network, as does the Apollo Diversified Credit Securitize Fund. Goldman Sachs and BNY launched digital tokens conferring ownership of money-market funds that operate on a blockchain built by Goldman, suggesting that Ethereum will have competition.

Activity on Ethereum amounted to more than $1.2 trillion this year, compared with $960 billion during the same time frame last year, according to data from The Block. Most of the transactions involve tether and USD Coin, the two largest dollar-pegged stablecoins, as well as deposits and withdrawals to major exchanges such as Binance and Coinbase, according to crypto data provider Nansen.

Betting on ether remains risky. It isn't clear that Ethereum will become widely used in finance. And some activity on the network appears to be spam-related, such as nefarious phishing attacks.

The surge in ether's price could also reflect the search for an alternative to bitcoin by speculators rather than a validation of Ethereum's future.

"At least for now, the narrative of Wall Street rebuilding their financial infrastructure on Ethereum is just a sales pitch to get people to buy ether treasury stocks," said Nicolai Søndergaard, a research analyst at Nansen.

Still, the Trump administration's embrace of cryptocurrencies adds momentum.

The passage of the Genius Act last month spurred interest in stablecoins and the possibility that banks, fintechs and even retailers could widely adopt dollar-pegged digital tokens. And Treasury Secretary Scott Bessent has suggested that stablecoins, many of which are traded on Ethereum, could play a role in reining in the national debt by driving demand for U.S. Treasurys.

Thiel has long been an evangelist for cryptocurrencies. Vitalik Buterin, co-founder of Ethereum, was a Thiel fellow, dropping out of college to receive backing from Thiel to launch the network.

Joey Krug, a longtime crypto investor, joined Founders Fund in 2023 to lead its crypto strategy. He left college in 2014 to create Augur, a decentralized prediction market built on Ethereum.

Write to Gregory Zuckerman at Gregory.Zuckerman@wsj.com and Vicky Ge Huang at vicky.huang@wsj.com