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The Oracle of Omaha has strong feelings about the value of Bitcoin.


Key points

  • Bitcoin inspires a passionate response, even from those who consider it foolish.
  • Buffett views Bitcoin as speculative and without real value.

Bitcoin, the digital currency operating free of oversight from banks and governments, tends to inspire passion. Some fervently believe digital currency is the wave of the future and an excellent way to get rich. And then there are others, like business magnate Warren Buffett, who distrust cryptocurrency in general.

Buffett’s position

Last month at the annual Berkshire Hathaway shareholders’ meeting, Buffett made it clear that he has zero interest in making Bitcoin part of his portfolio.

According to the Oracle of Omaha, “Whether it goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything. It’s got a magic to it, and people have attached magic to lots of things.”

Where the road diverges

Bitcoin serves different functions in different parts of the globe. For example, the countries of El Salvador and Panama have each adopted Bitcoin as their currencies. In El Salvador’s case, Bitcoin’s adoption did not work out as expected. According to the National Bureau of Economic Research, once Salvadorans used the $30 bonus they received, 60% got rid of the government’s Bitcoin wallet. And while the government hoped citizens would use Bitcoin to pay their taxes, 99% of Salvadorans opted not to.

Though big names like Elon Musk see potential in cryptocurrency, Buffett stands his ground. The self-made billionaire considers Bitcoin dangerously speculative with no real value. Buffett has gone so far as to call Bitcoin, “probably rat poison squared.”

For Buffett, it’s about generating value

According to CNBC, Buffett summed it up by comparing Bitcoin to assets that generate value.

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“If you said for a 1% interest in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon. (For) $25 billion I now own 1% of the farmland. (If) you offer me 1% of all the apartment houses 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 own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything. The apartments are going to produce rent, and the farms are going to produce food.”

Buffett believes that investing in Bitcoin is a gamble rather than an investment. “If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.”

Interest waning?

While it’s difficult to gauge overall enthusiasm for Bitcoin, the recent downturn in purchases is telling. Since reaching an all-time high in November 2021, Bitcoin purchases are down 43%. And new data from Google indicates that retail investors may be losing interest as cryptocurrency prices slump.

Google data also indicates that internet searches regarding Bitcoin have fallen since May 2021, when they were at a peak.

At age 91, it’s fair to say Warren Buffett has seen enough to form firm opinions. Time will time if he’s right about the future of Bitcoin.

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