As one of the world’s most prolific investors of all time, any comment that Warren Buffett makes related to the economy, stocks, or even cryptocurrency generates considerable attention.
Regarding cryptocurrencies and Bitcoin (BTC 0.69%) in particular, Buffett hasn’t shied away from criticizing the burgeoning asset class. On numerous occasions, Buffett has likened Bitcoin to the tulip mania that swept through the Netherlands roughly 400 years ago and is viewed as one of the first financial-asset bubbles.
He repeatedly said he doesn’t own any Bitcoin and never will. But what if I told you that Warren Buffett actually owns some Bitcoin? The answer is a little complicated, but you might be surprised to discover that Buffett and his conglomerate company Berkshire Hathaway (BRK.A -3.02%) (BRK.B -2.89%) back a financial technology company that is keen on crypto and more specifically, Bitcoin.
A Nu form of banking
The company is Nubank (NU -2.58%), and it’s revolutionizing banking in Latin America. Nubank is based in Brazil but serves customers in Mexico and Colombia as well. The primary goal of Nubank is to provide banking to every income group, not just the wealthy, the traditional customer base for Latin American banks. It offers a variety of products that allow customers to spend, save, invest, borrow, and protect their money in new and innovative ways. And one of these new and innovative products revolves around crypto.
In June 2022, Nubank launched its own crypto-trading platform which would allow its customers to buy and sell Bitcoin and Ethereum (ETH 3.22%). So far, the new product seems to be a hit as more than 1 million customers registered as users on the platform in less than one month. Nubank originally thought it would take at least a year before hitting those numbers.
The decision to make a move into crypto was summed up best by Nubank’s Chief Executive Officer David Velez. In an interview, the CEO stated that “cryptocurrencies are a growing trend in Latin America” and that the determination to provide a crypto-based product was the result of a belief that cryptocurrencies possess “transformational potential in the region.”
Buffett and Bitcoin
Now comes the interesting part. In an act of support, Nubank made the decision to allocate 1% of the cash on its balance sheet to Bitcoin. The company said the move was made to “strengthen the company’s conviction” in the potential of Bitcoin.
As of June 30, Nubank had roughly $3.1 billion in cash. With 1% allocated to Bitcoin, that would entail roughly $30 million in Bitcoin based on the most recent earnings report.
Warren Buffett doesn’t directly own any Bitcoin. On more than one occasion, he’s made his voice heard on how he believes the cryptocurrency is worthless and holds no intrinsic value. But his 2.3% stake in Nubank gives him indirect exposure to the asset.
To have a little fun, we can calculate just how much Bitcoin Buffett is exposed to indirectly. With his 2.3% stake in Nubank, that means Buffett “owns” somewhere around 27 bitcoins (worth about $570,00 at today’s prices) based on today’s prices.
From trend to strategy
This is surely a broad assumption and only meant to speculate a bit, yet there is an angle here that is worth mentioning: Bitcoin continues to permeate the financial world. Naysayers like Buffet might be realizing that it is becoming increasingly difficult to protect their portfolios from gaining exposure to the asset class, even if that exposure is indirect.
The trend of companies holding Bitcoin is a trend that only seems to be growing. Based on a handful of developments, like BlackRock (the world’s largest financial management corporation) offering Bitcoin to institutional investors, it’s plausible to assume that what is now just a trend could develop into a full-blown strategy embraced by companies to create a well-balanced portfolio.
In preparation for that shift from trend to legitimate strategy, investors can follow what some of the world’s most innovative companies are doing — owning some Bitcoin.
RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares), Bitcoin, and Ethereum. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
