Thrill-seekers and earnest crypto fans have spent the last few years watching the alternative investment rise and fall – sometimes with exhilaration and sometimes with that sinking stomach feeling.
After hitting an all-time peak of around $69,000 (Ksh.9.1 million current conversation rate) per unit on November 10, 2021, the world’s leading digital currency has since erased roughly 60 percent of its value, sitting at about $26,800 (Ksh.3.5 million) right now.
Bitcoin has since rallied once again over the last several weeks, up nearly 62% so far in 2023.
But what would the world’s most famous investor say to those who might be thinking of buying Bitcoin right now?
“If you…owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,” Warren Buffett told CNBC earlier this year.
Other than Bitcoin’s disappointing track record, here are three more reasons Buffett won’t go near it.
1. It has ‘no unique value at all’
The billionaire investor doesn’t like Bitcoin because he considers it an unproductive asset.
Buffett has a well-known preference for stocks of corporations whose value – and cash flow – come from producing things. But cryptocurrencies don’t have real value, Buffett said in a CNBC interview in 2020.
“They don’t reproduce, they can’t mail you a check, they can’t do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person’s got the problem.”
2. He doesn’t think crypto counts as money
Buffett has made his share of extremely cutting remarks about Bitcoin and cryptocurrency over the years: “I don’t have any Bitcoin. I don’t own any cryptocurrency, I never will,” he told CNBC back in 2020.
“It does not meet the test of a currency,” the billionaire said on CNBC in 2014. “It is not a durable means of exchange, it’s not a store of value.”
As a tradeable asset, Bitcoin boomed. But does it meet the three criteria of money? According to the most common definition, money is supposed to be a means of exchange, a store of value, and a unit of account.
But Buffett calls it a “mirage.”
3. He doesn’t understand it
Buffett became one of the most successful investors in history by sticking with stocks he understands.
“I get in enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don’t know anything about?”
But people like to gamble, he told CNBC after a 2018 Berkshire Hathaway annual meeting, which is another problem with nonproductive assets.
“If you don’t understand it, you get much more excited than if you understand it. You can have anything you want to imagine if you just look at something and say, ‘that’s magic.’”
But Buffett’s distaste for crypto stocks doesn’t necessarily mean you shouldn’t buy Bitcoin. Even the billionaire has come around on sectors he previously spoke out against.
He notoriously avoided tech stocks, even at the height of the dot-com bubble, and now his company’s largest holding is Apple.