Celebrity investor Kevin O’Leary told CNBC on Friday that a fifth of his investment assets are in cryptocurrencies and companies in the nascent digital asset industry.
“I have millions of dollars, 20% of my portfolio is now in cryptocurrencies and blockchain,” O’Leary said in an interview with Squawk Box. Blockchains are distributed digital ledgers that run cryptocurrencies.
Cryptocurrencies have received significant attention and investment in recent years, including from major institutions and high profile individuals such as hedge fund manager Paul Tudor Jones and fund manager Bill Miller. Many are touting bitcoin, the world’s largest cryptocurrency by market value, as a long-term store of value. There are also many other, smaller digital tokens.
Crypto proponents say it remains an early win for the industry — bitcoin itself has only been around since January 2009. However, crypto startups are raising billions of dollars in venture capital.
At the same time, the rising asset class remains volatile, with regulators such as Securities and Exchange Commission Chairman Gary Gensler warning of its “highly speculative” nature and lack of investor protection. The outgoing chairman of the UK financial regulator also warned of pump and dump schemes in some digital tokens.
Among crypto’s opponents, billionaire businessman Charlie Munger, a longtime associate of Warren Buffett and vice chairman of Berkshire Hathaway, has also criticized digital currencies and their volatility. In February, he said he would like the US to ban them. Buffett isn’t a fan either, calling bitcoin “rat poison squared” in 2018. Others compare Bitcoin to a Ponzi scheme.
Asked by CNBC’s Andrew Ross Sorkin if some cryptocurrencies won’t appear even in a decade, O’Leary said he took that risk factor into account.
“You have to be diversified. I own 32 different positions, including shares in FTX itself,” O’Leary said, revealing that he is a paid spokesperson for the cryptocurrency exchange founded by 30-year-old billionaire Sam Bankman-Freed.
“The thing is, you don’t know who will win. Will Ethereum Win? Will Solana win? Helium or Avalanche? co-host of “Shark Tank” and makes other venture capital investments. He is also the founder and chairman of the O’Shares ETF.
O’Leary’s comments on Friday came two days after President Joe Biden signed an executive order directing the US government to review the cryptocurrency industry. The administration says the goal of the order is both to eliminate risks and to “capture the potential benefits of digital assets and their underlying technologies.”
“It wasn’t a total ban, so that’s good news,” O’Leary said. However, he expressed concern that Biden’s directive includes a focus on the climate risks associated with cryptocurrencies.
The process of bitcoin mining, which in practice means running computers to verify transactions on the blockchain network, requires a lot of power. As a result, critics have lamented the carbon footprint of bitcoin mining.
O’Leary said he has invested in at least one private bitcoin mining venture. However, he said he sold his positions in publicly traded bitcoin mining companies after Biden’s order.
Disclosure: CNBC owns exclusive off-network cable TV rights to Shark Tank.