Bitcoin is on the rise again. Here’s why Warren Buffett remains a crypto hater

Published Sun, Oct 22 20236:50 AM EDT

Cryptocurrencies are on the rise again, helped by optimism surrounding the possible introduction of a spot bitcoin ETF. But no matter how strong this rally gets, it won't convince one of the industry's biggest critics — Warren Buffett. Bitcoin surged 10% over the past week, at one point briefly topping $30,000, as hopes grew that a spot bitcoin ETF will soon be approved. The idea among boosters is that such a vehicle would further legitimize the digital token and attract a wave of investment dollars, pushing the price of bitcoin even higher. But whether a bitcoin ETF soon becomes reality or not, it won't alter the Oracle of Omaha's thesis on cryptocurrencies, which is that they are highly speculative, non-productive assets. Buffett, who once famously called bitcoin "probably rat poison squared," has compared the bitcoin phenomenon to the tulip bulb mania in the Netherlands in the early 1600s . "All you're counting on is whether the next person is going to pay you more because they're even more excited about another next person coming along. But the asset itself is creating nothing," Buffett said in a 2018 CNBC interview. "It's been a very speculative, kind of Buck Rogers type thing, and people buy and sell them because they hope they go up or down just like they did with tulip bulbs a long time ago," said Buffett, Berkshire Halthaway's CEO. "If you just look at something and say that's magic, you can do it with shark teeth or seashells, or anything." Berkshire Vice Chairman Charlie Munger is an even a more vocal crypto hater, once saying digital currencies are a malicious combination of fraud and delusion, "good for kidnappers." Munger supports a ban of cryptocurrencies in the U.S. Wouldn’t buy ‘all of the bitcoin in the world’ for $25 Buffett believes that the digital token has no value because it doesn't deliver anything. Unlike farms, which produce food, and real estate, which produces rent, cryptocurrencies rely on market sentiment and supply-demand dynamics. "If you said … for a 1% interest in all the farmland in the United States, pay our group $25 billion, I'll write you a check this afternoon," Buffett said at Berkshire's 2022 annual meeting. "[For] $25 billion I now own 1% of the farmland. [If] you offer me 1% of all the apartment houses in the country and you want another $25 billion, I'll write you a check, it's very simple." "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," he added. 'Not a currency' The legendary, 93-year-old investor also said that bitcoin failed to meet the definition of a currency as its price fluctuates with the dollar. Crypto bulls tend to think bitcoin is a superior means of payment given its underlying, decentralized technology. "It is not a durable means of exchange. It's not a store of value," Buffett said in a 2014 CNBC interview. "People say 'well I'll sell you goods in bitcoins,' but they change the price of those every time the price of the dollar changes.... they are pricing off the dollar." BTC.CM= YTD mountain Bitcoin in 2023.