Reddit, the popular social media platform, has disclosed in newly revealed documents that it has been utilizing its surplus cash to acquire small quantities of Bitcoin and Ethereum. The company, which has been under Treasury since 2022, expressed a belief in the substantial potential of cryptocurrencies and blockchain technology. In its IPO filing with the U.S. Securities and Exchange Commission on February 22, Reddit stated its intention to allocate a portion of its excess cash reserves towards investments in Bitcoin and Ethereum. However, as of December 31, 2023, Reddit reported that the amounts of Bitcoin and Ethereum held in its reserves were considered "not material."
While Reddit's cryptocurrency holdings primarily consist of Bitcoin and Ethereum, the company also disclosed its experimentation with blockchain technology through the acquisition of Ether and Polygon’s MATIC as payment methods for specific virtual goods sales. Although the receipts of Ether and MATIC were deemed "immaterial" in both 2022 and 2023, Reddit indicated a possibility of continuing to utilize these cryptocurrencies as payment options in the future.
Despite recognizing the significant potential of cryptocurrencies and blockchain technology, Reddit remains uncertain about the extent of their adoption by businesses and consumers. The company expressed cautious optimism, acknowledging that the popularity and adoption of cryptocurrencies are still evolving trends. Reddit emphasized the need for further observation to determine whether cryptocurrencies and blockchain technology will maintain their momentum in both consumer and enterprise spheres.
Financially, Reddit reported a net loss of $90.8 million in 2023, despite experiencing a 20.6% year-over-year increase in revenue, totaling $804 million. Bloomberg's report on January 28 indicated a potential decrease in Reddit's valuation, which was previously estimated at $10 billion following a 2021 funding round. However, the current valuation may now be substantially lower, potentially reaching only half of its previous estimation.
In a notable move, Reddit discontinued its blockchain-based rewards service, Community Points, in October. The service rewarded users with points for active participation in specific Reddit subreddits. Reddit attributed the decision to concerns regarding scalability, highlighting the challenges associated with maintaining and expanding blockchain-based initiatives within its platform.
