Warren Buffett invests in digital currencies!

Warren Buffett

According to press reports, the famous American investor and billionaire “Warren Buffett” has purchased a stake worth one billion dollars in the largest bank “Nubank” in Brazil, which focuses its dealings on financial technology and digital currencies.

This is not the first investment by Berkshire Hathaway, whose executive management is headed by Warren Buffett, in the Brazilian bank. Rather, Buffett previously acquired 30 million shares in No Bank for $250 million in December 2021. .

After Buffett’s investments, the Brazilian bank’s market capitalization is currently estimated at $41.5 billion, based on CoinDesk estimates.

The investment comes as a surprise to many, given Buffett’s public criticism of cryptocurrencies, which he previously described as “rat poison.”

Buffett commented on one occasion: “If you buy bitcoin or another digital currency, you just hope that someone else will buy it at a higher price, but in the end it does not produce anything and is not even a store of value.”

This is not Berkshire’s first investment in Nubank. Buffett’s firm reportedly acquired 30 million Nubank shares for $250 million in December 2021 when the latter went public. At that time, Nubank’s valuation reached $41.5 billion, per a Coindesk report. Berkshire had also bought a stake worth $500 million in the company in June 2021.

The investments are interesting given Buffett, also called the ‘sage of Omaha’, has always been against cryptocurrency and has even called it ‘rat poison’.

“If you buy something like Bitcoin or some cryptocurrency, you don’t have anything that is producing anything, you’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more,” Buffett said in an interview with Yahoo Finance.

Buffett’s partner and Vice Chairman of Berkshire Charlie Munger has also been an open critic of cryptos, particularly Bitcoin, which he once said was ‘disgusting and contrary to the interests of civilisation’.

Also Read | ‘It’s like a venereal disease’: Warren Buffett close aide Charlie Munger bats for crypto ban

While Nubank does not allow trading in cryptocurrencies, its investment unit NuInvest allows customers to invest in Bitcoin exchange-traded fund (ETF).

In its US SEC filing, detailing the latest investment, Hathaway also said it sold Mastercard and

Visa shares worth $1.3 billion and $1.8 billion, respectively.

Is Buffett finally accepting Bitcoin as a good investment?

The decision to back Nubank is a major milestone for Berkshire Hathaway’s investment strategy. It’s an indicator that the company is starting to move away from credit companies and focusing more on fintech firms.

Nubank is also big on digital currencies and even offers several bitcoin products. Therefore, Buffett’s move to invest in the fintech firm could indicate that he’s finally warming up to cryptocurrencies, or at least cryptocurrency products like Bitcoin ETFs.

In September of 2020, Nubank acquired Easynvest, a popular trading platform that has been offering a Bitcoin Exchange Traded Fund (ETF) since June 2021. The ETF is backed by QR Management and is listed on the B3, Brazil’s second oldest stock exchange.

Also read: How banks are joining the crypto bandwagon, albeit reluctantly

Nubank’s newfound exposure to the crypto sector will undoubtedly make a good revenue source for Buffett, especially with his sizeable investment in the bank. Even if he doesn’t believe in bitcoin, Buffett will certainly benefit from it.

The growth in crypto-related investment products has been substantial over the last couple of years. According to Bloomberg Intelligence data, the number of crypto-related products has almost doubled, rising from 35 to 80. The total value of the assets held has also skyrocketed to $63 billion from $24 billion in 2021.

As per the Cointelegraph report, Leah Wald, chief executive of crypto-asset management firm Valkyrie Investments, has predicted an increase in the capital flow into crypto-related investment products. “If you look at inflows from a volume perspective, not only has it been steady even with the price corrections that Bitcoin is notoriously famous for, but you’re seeing a lot of institutions jump in”, she said in a statement.

The trajectory for crypto and related products is likely to be a straight line ahead. Maybe it’s the reason why Buffet is starting to dip his toes in the crypto waters. According to Greg Waisman, co-founder and chief operating officer of crypto wallet service Mercuryo, “The Nubank investment can be tagged as Buffett’s way of supporting the fintech/crypto world without taking back his criticisms of the past.”

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