April 19, 2024
Reddit Converts Cash to Bitcoin, Ethereum
Latest Cryptocurrency News

Reddit Converts Cash to Bitcoin, Ethereum

Social media giant Reddit has strategically allocated its excess funds, gradually acquiring modest amounts of Bitcoin (BTC) and Ether (ETH) for its treasury since 2022, as revealed in recent filings. The company, slated for an initial public offering (IPO), expressed confidence in the “significant potential” of crypto and blockchain technologies.

In a filing with the United States Securities and Exchange Commission on February 22, Reddit disclosed its cryptocurrency investments, stating, “We invested some of our excess cash reserves in Bitcoin and Ether.” As of December 31, 2023, Bitcoin and Ether were the sole cryptocurrencies held in Reddit’s treasury, albeit in amounts deemed “immaterial.”

“The net carrying value of our cryptocurrencies, which consisted primarily of Bitcoin and Ether, as well as all related cryptocurrency activity, was immaterial for the periods presented.”

Additionally, Reddit disclosed its experimentation with blockchain technology by utilizing Ether and Polygon’s MATIC as a means of payment for certain virtual goods. While the amounts received in Ether and MATIC were considered “not material” for 2022 and 2023, Reddit hinted at the possibility of continuing to employ these cryptocurrencies as payment methods in the future.

The filing also highlighted that Reddit’s product and engineering team holds cryptocurrencies for specific purposes, although the types and quantities were not specified. Despite acknowledging the “significant potential” in blockchain-related technologies, Reddit remains uncertain about the sustained adoption by businesses and consumers.

The S-1 registration, typically used by companies preparing to go public, provided financial insights, revealing that Reddit incurred net losses of $90.8 million in 2023, accompanied by a 20.6% increase in revenue to $804 million year-on-year. While Reddit was valued at $10 billion following its 2021 funding round, a January 28 Bloomberg report suggested its current valuation might be halved.

“While we believe cryptocurrencies and blockchain technology have significant potential, the popularity and prevalence of cryptocurrencies is a relatively recent trend, and whether cryptocurrencies and blockchain technology will continue to be adopted by consumers and businesses in the long term is uncertain.”

In October, Reddit discontinued its blockchain-based rewards service, “Community Points,” citing scalability concerns as the primary reason for the closure. As Reddit navigates the complexities of the crypto landscape, its strategic moves underscore a nuanced approach to digital asset integration within its corporate strategy.

Photo by Brett Jordan

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