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Reddit Sells Most of Its Bitcoin and Ethereum Holdings, Describes Move as a Means of Strengthening Financial Reserves

Linda Hamilton
Release: 2024-10-31 18:46:25
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Reddit Inc. disclosed that it has sold most of its cryptocurrency holdings, primarily consisting of Bitcoin (BTC) and Ethereum (ETH),

Reddit Sells Most of Its Bitcoin and Ethereum Holdings, Describes Move as a Means of Strengthening Financial Reserves

Reddit Inc. has disclosed the sale of most of its cryptocurrency holdings, primarily Bitcoin (BTC) and Ethereum (ETH), in a recent filing with the US Securities and Exchange Commission (SEC).

During the three months ending September 30, 2024, Reddit reported selling nearly $6.9 million worth of cryptocurrency. The company emphasized that the net carrying value of these assets, along with the recognized gains from the sale, were considered "immaterial."

In its filing, Reddit described this sale as a means of strengthening its financial reserves.

The sale of Reddit's crypto holdings follows the company's filing for an initial public offering (IPO) in February 2024. At that time, the company held an “immaterial” amount of cryptocurrency, acquired using excess cash reserves.

While Reddit has offloaded its BTC and ETH holdings, the company still maintains some crypto assets. These include MATIC, derived from the sale of virtual avatars on Ethereum's scaling network. Notably, Polygon recently migrated its token to a new one named POL.

Since 2022, Reddit has gradually increased its cryptocurrency portfolio using excess cash reserves. The company has previously expressed optimism about the potential of crypto and blockchain technologies, recognizing their "significant potential."

However, Reddit's recent filing also highlighted challenges faced by the company in the advertising sector. It experienced declines in advertising demand, particularly from technology, media, entertainment, and cryptocurrency sectors.

The filing attributed this to various macroeconomic factors, such as rising interest rates and geopolitical uncertainties, impacting these industries.

Since its initial entry into the crypto space in 2020, Reddit has scaled back its involvement. Notably, it transferred control of its Moons token to the community and discontinued its Collectible Expressions feature, which was associated with Polygon-based avatars.

Under the current investment policy, any future investments in Bitcoin or cryptocurrencies will require board approval. These investments will also be limited to Bitcoin, Ethereum, or other assets identified as "likely not being a security."

Despite the sale of a majority of its crypto holdings, the company maintained its belief in the potential of cryptocurrencies and blockchain technology. However, it also acknowledged the uncertainty regarding the long-term adoption of these technologies by consumers and businesses.

Interestingly, Reddit's app still features a digital asset wallet, called Vault, which is part of the platform's vision for a "new frontier" in digital engagement.

On Oct. 30, Reddit's stock price rose 42% to reach $116 per share. The company exceeded analysts' expectations with a reported profit of $29.9 million, contrasting with a loss of $7.4 million in the same quarter the previous year.

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