Buffett recently said he would not invest in Bitcoin, alleging that it does not produce any tangible goods. However, the cryptocurrency allows sending remittances, exchanging money, paying for products and services, and achieving returns.
American value investor Warren Buffett once again lashed out at Bitcoin as a valuable financial asset. He commented that the pioneering cryptocurrency did not produce anything, in contrast to a farm or real estate.
Buffett said he would not buy Bitcoin (BTC) even at bargain prices but that he would invest in estate and productive land. The financial expert claimed that he would not accept all the existing bitcoins for USD 25. He stated that he would not know what to do with them except sell them to someone else.
He explained that a real estate department would produce homes while a farm would grow food. However, he scoffed that people considered some assets magical and stated that anyone could launch a cryptocurrency. He even suggested that he could create a BuffettCoin, which would still be useless anyway.
The main reason for Buffett to criticize Bitcoin is that he considers it produces no tangible goods nor gives concrete financial returns. He remarked that an asset only has value when people can use it to have something they need. As he held a one US dollar bill, he highlighted that the US government does not have to replace its legal currency.
Buffett and Munger Consider Bitcoin Is the Least Recommend Asset
Another renowned American investor, Charlie Munger, expressed his opinion about the pioneering cryptocurrency. He advised that people should not invest in Bitcoin when they have their retirement account, as many advisors might think.
In 2021, BTC had a market capitalization higher than 47 of the 48 companies in which Warren Buffett participated. Strikingly, the capitalization of BTC now exceeds that of Berkshire Hathaway, which the financial specialist runs.
Munger, the vice president of the Berkshire Hathaway firm, has referred to Bitcoin as rat poison on several occasions since early 2013.
Likewise, Buffett maintains the same opinion as in his previous statements on the alleged usefulness of Bitcoin. In 2020, he also stated that people could do nothing with that cryptocurrency but sell it.
Bitcoin Is an Asset that Has Many Productive Angles
The logic of Warren Buffett and Charlie Munger cannot apply to an asset like Bitcoin. That cryptocurrency and its technology do not work as a company or commodity that produces returns.
However, angles emerge and consolidate, allowing owning Bitcoin as a viable investment asset class as it grows.
For example, millions of users adopt its technology leading to the birth of companies that offer international remittance and exchange services. That increases the demand for the crypto asset and helps build a Bitcoin-based industry.
A growing number of countries are adopting Bitcoin as a legal tender, a payment method, or a permitted asset. In addition to the well-known case of El Salvador, those nations include Panama, Cuba, and the Central African Republic.
Bitcoin mining is an industry closely related to the production and distribution of energy. That turns its processing power (hash rate) into an asset that allows for making financial decisions and achieving returns.
Another point for Bitcoin is a speculative approach, as the cryptocurrency has steadily appreciated since its inception. In that regard, analysts consider that the cryptocurrency created by Satoshi Nakamoto could start a new bullish rally from now.
By Alexander Salazar
