Reddit Sells Majority of Crypto Portfolio, Offloading Bitcoin and Ethereum

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, was considered "immaterial." 

In its filing, Reddit describes this sale as a means of strengthening its financial reserves. Reddit's decision to offload its crypto assets follows its move to file 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 moved away from Bitcoin and Ethereum, it still holds some crypto. These include Ethereum and Polygon, which are derived from the sale of virtual avatars on Ethereum's scaling network. Reddit stated that it held MATIC, though Polygon recently migrated its token to a new one named POL.

Strategic Shift

Since 2022, Reddit has gradually added to 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 reveals challenges the company faces in the advertising sector. It has experienced declines in advertising demand, particularly from technology, media, entertainment, and cryptocurrency sectors. 

The filing cites various macroeconomic factors, such as rising interest rates and geopolitical uncertainties, that have impacted these industries.

Future Considerations

Reddit has reduced its involvement in the crypto space since its initial entry in 2020. Notably, it transferred control of its Moons token to the community and discontinued its Collectible Expressions feature 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."

The company maintains that it believes in the potential of cryptocurrencies and blockchain technology. However, it also acknowledges the uncertainty regarding the long-term adoption of these technologies by consumers and businesses.

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