As one of the world’s most prolific investors of all time, any comment from Warren Buffett regarding the economy, stocks, or even cryptocurrency garners considerable attention.
Regarding crypto-currencies and Bitcoin (BTC 0.72%) in particular, Buffett has been quick to criticize the booming asset class. On numerous occasions, Buffett has compared Bitcoin to the tulip mania that swept the Netherlands around 400 years ago and is considered one of the first financial asset bubbles.
He has repeatedly said that he does not own any bitcoins and never will. What if I told you that Warren Buffett actually owns some Bitcoin? The answer is a bit complicated, but you might be surprised to find that Buffett and his conglomerate Berkshire Hathaway (BRK.A -3.02%) (BRK.B -2.89%) back a financial technology company keen on crypto and more specifically on Bitcoin.
A Naked form of bank
The company is Nubank (NAKED -2.58%), and it is revolutionizing the banking sector in Latin America. Nubank is based in Brazil but also serves clients in Mexico and Colombia. Nubank’s main objective is to provide banking services to all income groups, not just the wealthy, traditional clientele of 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 those new and innovative products revolves around crypto.
In June 2022, Nubank launched its own crypto-trading platform that would allow its customers to buy and sell Bitcoin and Ethereum (ETH 3.41%). So far, the new product appears to be a success as more than a million customers have registered as users on the platform in less than a month. Nubank originally thought it would take at least a year to reach those numbers.
The decision to go crypto was best summed up by Nubank CEO David Velez. In an interview, the CEO said that “cryptocurrencies are a growing trend in Latin America” and that the determination to provide a crypto-based product stemmed from the belief that cryptocurrencies had “transformative 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 its balance sheet cash to Bitcoin. The company said the move was made to “reinforce the company’s belief” in Bitcoin’s potential.
As of June 30, Nubank had approximately $3.1 billion in cash. With 1% allocated to Bitcoin, this would imply approximately $30 million in Bitcoin based on the latest earnings report.
Warren Buffett does not directly own any Bitcoin. On more than one occasion, he has made his voice heard about how he thinks cryptocurrency is worthless and has no intrinsic value. But its 2.3% stake in Nubank gives it indirect exposure to the asset.
For a little fun, we can calculate how much Bitcoin Buffett is indirectly exposed. With his 2.3% stake in Nubank, that means Buffett “owns” somewhere around 27 bitcoins (worth around $570.00 at today’s prices) based on the prices of today.
From trend to strategy
Surely this is a broad assumption and only intended for a little speculation, but there is an angle here worth mentioning: Bitcoin continues to permeate the financial world. Opponents like Buffet might find that it is becoming increasingly difficult to protect their portfolios from 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 money management firm) offering Bitcoin to institutional investors, it’s plausible to assume that what is now just a trend could turn into a full-fledged strategy adopted by companies to create a well-balanced portfolio.
In preparation for this shift from trend to legitimate strategy, investors can follow what some of the most innovative companies in the world are doing: owning Bitcoin.
RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Berkshire Hathaway (B shares), Bitcoin and Ethereum. The Motley Fool recommends the following options: $200 long calls in January 2023 on Berkshire Hathaway (B shares), $200 short puts in January 2023 on Berkshire Hathaway (B shares) and short calls of $265 in January 2023 on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.