Warren Buffett, the famed investor known as the “Sage of Omaha” knew things before the rest of the market. He once referred to cryptocurrency as Rat Poison. His bank account is now stating the opposite.
Berkshire Hathaway, in particular, has invested $1 billion in a digital bank that focuses on cryptocurrency.
Crypto is Not a Bug
With an SEC filing earlier this week, Berkshire Hathaway revealed its crypto stake. It was disclosed that Buffett’s company has invested $1 billion in Nubank. It is a Brazilian digital bank and Latin America’s largest of its sort.
Nubank is a neobank, or a bank that works outside of standard banking regulations. NuInvest is the digital bank’s investing arm. It allows users to invest in a Bitcoin exchange-traded fund, tapping into a financial market that Berkshire’s executives have shown little enthusiasm for.
Berkshire Hathaway’s chairman and CEO has previously referred to bitcoin as “rat poison”. He also stated this as an unprofitable asset with “no special value at all.”
Buffett’s longstanding colleague and vice chairman of Berkshire Hathaway, Charlie Munger, hasn’t shied away from expressing his strong views on Bitcoin. According to him, digital currencies should have never existed. He would not want any bitcoin merchants to marry into his family, according to a recent statement.
Crypto Hate Runs Deep
Munger has a special affinity for Bitcoin, the most widely traded cryptocurrency. He once described it as “repulsive and opposed to civilization’s interests.” Munger has backed China’s decision to prohibit Bitcoin trade in the nation. He also has urged the US to follow suit.
Berkshire Hathaway’s latest investment in Nubank is not the first time the conglomerate has dabbled in the crypto industry, despite its owners’ professed contempt for cryptocurrencies and the crypto market.
Berkshire’s Come Around
Last summer, Berkshire purchased a $500 million investment in Nubank, months before the business went public in December 2021. Nubank declared at the time that this was the single largest investment the fintech bank had ever received.
Last year, as Berkshire increased its crypto investments, it also reduced its holdings in other, more traditional financial assets. In the same SEC filing that reported the loss of over $3 billion in Berkshire Hathaway’s Visa and Mastercard holdings and same SEC filing that showed Berkshire Hathaway’s $1 billion investment in Nubank, the company disclosed a loss of roughly $3 billion in its Visa and Mastercard shares.
While Buffett and Munger may have a strong distaste for cryptocurrency, digital financial service providers like Nubank may offer a completely different kind of potential.
In Latin America, a big percentage of the population feels underserved by the existing banking and financial system. There is fierce competition among up-and-coming digital banks. Nubank, for example, is attempting to tap into a sizable potential consumer market of people who are mostly unsatisfied with the current system.
The Latin American region is brimming with opportunities. Nubank cofounder Cristina Junqueira told Fortune in June that the mix of a great population, terrible client experiences and extremely high fees unmatch. There is no country on the planet that better equipped for fintech startups to attack than Singapore.
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