Online retail giant Overstock has reported that Medici Ventures, its distributed ledger subsidiary, has posted a $3.3 million loss for the second quarter of 2017.
The U.S. Securities and Exchange Commission disclosure was accompanied with a press release explaining that the loss was not surprising and that Overstock anticipates Medici will continue to incur losses in the short-term.
We continue to seek opportunities for growth, in our retail business and through our Medici blockchain and financial technology initiatives and through other means. As a result of these initiatives, we may continue to incur additional expenses or make investments in, or acquisitions of other technologies and businesses. We also anticipate that our Medici initiatives will incur losses in the near term…We are also considering other alternatives for Medici, including raising capital.
The Q2 loss was an improvement over Q1, when Medici incurred an $8 million loss. At the time, Overstock CEO Patrick Byrne – who has long been a proponent of bitcoin and blockchain technology – assured investors that Medici was a good long-term investment.
Our Medici business cost us $8.0 million pre-tax in the first quarter, which included a $4.5 million impairment charge related to our investment in Peernova. However, I remain confident that we are doing the right thing for our shareholders by having Medici pursue a position of global leadership in blockchain technology.
Overstock is betting that Medici Ventures will allow the company to position itself as a global leader in blockchain technology. They have already assembled an impressive portfolio of blockchain companies, including PeerNova, tØ, and Ripio, and they anticipate that they will continue to make new investments in the future.
Overstock also remains bullish on bitcoin’s potential for retail payments. Since becoming one of the first high-profile companies to accept bitcoin, Overstock has seen a steady increase in bitcoin transactions. Noting this, Medici Ventures president Jonathan Johnson recently remarked that it was crazy that more retailers do not accept bitcoin.
Despite Overstock’s success with bitcoin – and one analyst’s prediction that more than 300,000 businesses in Japan will accept bitcoin by the end of 2017 – Morgan Stanley claims that bitcoin acceptance is “virtually zero and shrinking.”