Bitcoin has steadily gained acceptance in the traditional finance and investment world over the past few years, but Warren Buffett remains skeptical about Bitcoin.
He said at Berkshire Hathaway’s annual shareholder meeting on Saturday that it’s not a productive asset and isn’t producing anything tangible. Despite a changing public perception of cryptocurrency, Buffett still wouldn’t buy it.
“I don’t know whether it’ll go up or down in the next year or in five or ten years. But I’m pretty sure it won’t do anything,” Buffett said. “There’s something magical about it, and people associated a lot of things with magic.”
Even Bitcoin enthusiasts tend to view the cryptocurrency as a passive asset that investors buy and hold and hope the price will appreciate over a long period of time. Buffett himself commented that there is “no one” missing Bitcoin, everyone is a long-term holder.
For more sophisticated crypto investors, some coins offer a way to put their crypto to productive use — either through lending or as collateral — to create additional portfolio benefits. However, they are still young, highly speculative and have not penetrated the mainstream like Bitcoin.
Buffett explained why he sees no value in Bitcoin and compared it to things that generate other types of value.
“If you said . . . for a 1 percent interest 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’re offering me 1% of all apartment buildings in the country and you want another $25 billion, I’ll write you a check, it’s very simple. Now if you told me that you own all the bitcoins in the world and you offered them to me for $25 I wouldn’t take them because what would I do with them? I’d have to sell it back to you one way or another. It won’t do anything. The apartments will produce rent and the farms will produce food.”
Investors have pondered how to value Bitcoin for years, in part because of its potential to serve various functions. It has established itself as an investment asset in Western markets, particularly over the past year as interest rates and inflation have risen. In other markets, there is still enormous potential for use as digital cash.
“Assets have to deliver something to someone to have value. And there is only one currency that is accepted. They can come up with all sorts of things — we can put Berkshire coins on them … but at the end of the day it’s money,” he said, holding up a $20 bill. “And there’s no reason on earth why the United States government … is letting Berkshire replace its money.”
Both Buffett and Charlie Munger have been hostile towards Bitcoin in the past. Most famously, Buffett said Bitcoin is “probably rat poison squared.” Munger doubled that sentiment on Saturday.
“In my life, I try to avoid things that are stupid, nasty, and make me look bad in comparison to someone else — and bitcoin does all three,” Munger said. “First, it’s stupid because it’s probably still going to zero. It’s evil because it undermines the Federal Reserve System… and third, it makes us look stupid compared to the communist leader in China. He was smart enough to ban bitcoin in China.”