Bitcoin has been gaining acceptance in the world of finance and traditional investing in recent years, but Warren Buffett sticks to his skeptical stance on bitcoin.
He told Berkshire Hathaway’s annual shareholder meeting on Saturday that it is not a productive asset and does not produce anything tangible. Despite a change in public perception about cryptocurrency, Buffett still wouldn’t buy it.
“Whether it goes up or down in the next year, or in five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything,” Buffett said. “It has magic and people have added magic to a lot of things.”
Even bitcoin enthusiasts tend to view the cryptocurrency as a passive asset that investors buy and hold and expect to see an increase in price over a long period. Buffet himself commented that “nobody” is short on bitcoin, they are all long-term holders.
For more sophisticated crypto investors, some coins offer them a way to use their crypto productively, either through loans or as collateral, to create additional portfolio profits. However, they are still young, highly speculative, and have not broken into the mainstream like Bitcoin.
Buffett explained why he sees no value in bitcoin, comparing it to things that generate other types of value.
“If you said … for a 1% stake in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon,” Buffett said. “[For] $25 billion I now own 1% of the farmland. [If] You offer me 1% of all the apartments in the country and you want another $25 billion, I’ll write you a check, it’s very simple. Now if you told me you had all the bitcoins in the world and offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it to you one way or another. It’s not going to do anything. The apartments are going to produce income and the farms are going to produce food.”
Investors for years have been puzzled on how to value bitcoin partly due to its potential to fulfill different functions. In Western markets it has established itself as an investment asset, particularly in the last year as rates and inflation have been on the rise. In other markets, people still see huge potential for use as digital money.
“Assets, to have value, have to deliver something to someone. And only one coin is accepted. All kinds of things can be invented, we can put Berkshire coins… but in the end, this is money,” he said, holding up his hand. a $20 bill “And there’s no reason in the world why the United States government… is going to let Berkshire money replace theirs.”
Both Buffett and Charlie Munger have made hostile comments towards bitcoin in the past. Most famously, Buffett said that bitcoin is “probably rat poison squared.” Munger doubled down on that sentiment on Saturday.
“In my life, I try to avoid things that are stupid and evil and make me look bad compared to someone else, and Bitcoin does all three,” Munger said. “First, it’s stupid because it’s still likely to go to zero. It’s evil because it undermines the Federal Reserve System… and third, it makes us look foolish compared to the communist leader in China. He was smart enough to to ban bitcoin in China.”