Berkshire Hathaway's Take On Bitcoin Investments

Despite his vocal disdain for Bitcoin, billionaire investor Warren Buffett has profited from the cryptocurrency through his investment company, Berkshire Hathaway. In 2021, Berkshire Hathaway invested $750 million in Nu Holdings, a Brazil-based fintech company and owner of the crypto-friendly Nubank. As of 2023, this investment has generated substantial returns for Buffett and Berkshire Hathaway, outperforming other notable stocks in their portfolio, such as Apple and Amazon. While Buffett has consistently criticised Bitcoin and cryptocurrencies, referring to them as rat poison squared, his actions indicate a nuanced approach to the crypto market, leveraging indirect exposure through investments in crypto-friendly businesses.

Berkshire Hathaway's $1 billion position in Nu Holdings

Warren Buffett's company Berkshire Hathaway has a $1 billion position in Nu Holdings, a Brazilian fintech company. Nu Holdings, which operates under the name Nubank, was founded in 2013 as a digital-first, low-cost financial services provider. Nubank offers a range of financial products, including bank accounts, credit cards, and personal loans, which are accessible to anyone with a smartphone or computer.

Berkshire Hathaway's investment in Nu Holdings is notable given Buffett's well-known dislike of Bitcoin and other cryptocurrencies. In fact, Buffett has stated that cryptocurrencies will "come to a bad ending", and that even if offered all the Bitcoin in the world, he wouldn't take it. However, Nu Holdings has a crypto-friendly stance and allows its users to buy, sell, and transact in various cryptocurrencies through its Nucripto platform. The company also has its own native token, Nucoin.

Despite Buffett's aversion to cryptocurrencies, it appears that either he or one of his investment managers, Todd Combs or Ted Weschler, saw the potential in Nu Holdings. The company began buying shares of Nu Holdings in 2021, and as of 2024, holds around 107 million shares, giving it about a 2.58% stake in the company. This investment has paid off, with Nu Holdings extending a four-day gain to 36% after Berkshire Hathaway's stake was revealed.

Nu Holdings' strong performance can be attributed to its successful business model, which disrupted the Latin American banking industry by offering low-cost financial products to a market that was previously dominated by powerful players charging high fees. As a digital-first bank, Nubank has been able to move faster and more efficiently than its competitors, and its customer base has grown every quarter since 2014, surpassing 90 million customers in 2023.

In summary, Berkshire Hathaway's $1 billion position in Nu Holdings is a significant investment that highlights the company's strong market position and growth potential, despite its exposure to the cryptocurrency market, which Buffett has publicly criticized.

Nu Holdings' crypto-friendly bank Nubank

Despite his vocal criticism of cryptocurrencies, billionaire investor Warren Buffett has been revealed to have quietly made substantial investments in the crypto sector through his company Berkshire Hathaway. Notably, Berkshire Hathaway invested $500 million in the Brazilian fintech firm Nu Holdings, owner of the crypto-friendly bank Nubank, in June 2021. By December 2021, Buffett's company had increased its investment in Nubank by an additional $250 million, bringing its total investment to $1 billion.

Nu Holdings is a Latin American digital bank that has embraced the cryptocurrency space. The company has launched several cryptocurrency products and allocated a portion of its cash to Bitcoin. Nubank, the banking arm of Nu Holdings, is headquartered in São Paulo, Brazil, and is the largest fintech bank in Latin America. It offers a range of services, including a digital account (NuConta), an international credit card, personal loans, life insurance, and investments. Nubank's differentiating factor is its mobile app, which allows users to manage their credit card and track transactions in real time, among other features.

Nubank has experienced significant growth and success since its founding in 2013. By 2024, it boasted 80.4 million customers in Brazil and 1.51 million between Mexico and Colombia, with a revenue of $1.69 billion. The bank's customer base skyrocketed to 84 million in the first half of 2023, and it notched nearly $2 billion in revenue during that period. Nubank's stock price has soared, outperforming other Buffett holdings, including giants like Amazon, Coca-Cola, Bank of America, and Kraft Heinz. This strong performance has made Nu Holdings Buffett's best-performing investment in 2023, despite his public disdain for Bitcoin and cryptocurrencies.

While Buffett has dismissed Bitcoin as a "gambling token" and "rat poison squared", his actions indicate a recognition of the potential value in crypto-related investments. Nubank's success highlights the growing adoption and acceptance of cryptocurrencies in Latin America and beyond. It remains to be seen whether Buffett will continue to increase his exposure to the crypto sector or if this investment will remain an outlier in his portfolio.

Berkshire Hathaway's profit from Nu Holdings

Despite billionaire investor Warren Buffett's disdain for bitcoin, his $350 billion investment company Berkshire Hathaway has profited from its investment in Nu Holdings, a Latin American digital bank and owner of the crypto-friendly Nubank.

Buffett's conglomerate originally invested $500 million in Nubank in June 2021, then invested an additional $250 million when the crypto-friendly Brazilian bank went public in December 2021. Berkshire owned around 107 million shares of the digital lender at the end of June 2024, giving it about a 2% stake worth $845 million.

Nu Holdings' profits have soared since its IPO debut two years ago, with the company's revenue surging 61% to about $1.9 billion in the year ending June 2024. Its customer count also grew by 28% to 84 million over the same period.

The bank, which allows users to trade bitcoin and other cryptocurrencies, has seen its stock price rocket over 100% so far this year. This has resulted in significant gains for Berkshire Hathaway, with its investment in Nu Holdings likely being the best-performing stock of Buffett's portfolio in 2023 and 2024, offering a stark example of why his comments about digital assets in the past might not hold true.

Nu Holdings' performance, up nearly 125% in 2024, is in sharp contrast to Buffett's negative stance on Bitcoin. The investment success has put Buffett in a tricky position, as Berkshire Hathaway continues to benefit financially through its investment in the crypto-friendly Nu Holdings.

Warren Buffett's criticism of Bitcoin

Warren Buffett, the billionaire chief executive of Berkshire Hathaway, has been one of the most vocal critics of Bitcoin and cryptocurrencies over the last few years. He has described Bitcoin as a gambling token and "probably rat poison squared", dismissing it as having no intrinsic value. In a 2018 interview, Buffett said that Bitcoin offered investors promising opportunities for speculation more than investment, and pointed out that the average Bitcoin investor simply hoped the next investor in line would believe in the hype:

> If you buy something like Bitcoin or some cryptocurrency, you don't really have anything that has produced anything. You're just hoping the next guy pays more.

Buffett has also said that cryptocurrencies are not productive assets and that he wouldn't buy Bitcoin even if it dropped to $25. He believes that Bitcoin and other cryptocurrencies are not viable or valuable investments because they are not value-producing assets. During the Berkshire Hathaway annual shareholder meeting in 2022, he said:

> 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.

Buffett's right-hand man at Berkshire Hathaway, Charlie Munger, has also heavily criticised Bitcoin, calling it "the stupidest investment I ever saw".

Buffett's alternative investments

Warren Buffett, the billionaire chief executive of Berkshire Hathaway, has been a vocal critic of Bitcoin and cryptocurrencies over the years. He has referred to Bitcoin as a "gambling token", claiming it doesn't have any intrinsic value. Despite this, Buffett has quietly made significant investments in the crypto space.

In addition to his direct investment in Nubank, Buffett also owns shares in Nu Holdings, a Latin American digital bank that is crypto-friendly and has launched several cryptocurrency products.

While Buffett has strongly criticised Bitcoin and cryptocurrencies, his actions show that he recognises the potential of the crypto space as a viable investment opportunity. This is further evidenced by his investment in Nubank, which allows users to trade cryptocurrencies and has launched its own crypto product.

Buffett's approach to alternative investments is influenced by his mentor, Benjamin Graham, the father of 'value investing'. This investment philosophy emphasises investing in what you know, avoiding fads, and focusing on companies with high profits and competitive advantages.

Buffett has also expressed scepticism about alternative investment funds, such as hedge funds and private equity, due to the high fees associated with these funds, which can eat into investment returns. Instead, he recommends investing in index funds, which offer a simpler and more cost-effective approach to investing.

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