According to Fortune, Warren Buffett's company Berkshire Hathaway has bought
a $1 billion stake in a crypto-focused digital bank.
Berkshire Hathaway announced its crypto investment with a filing with the
SEC earlier this week. It was revealed that Buffett's company had purchased
$1 billion in shares of Nubank, a digital bank based in Brazil, and the
largest of its kind in Latin America.
Nubank is what is called a neobank, a type of bank that operates outside the
rules of the traditional banking system. Unlike most banks, Nubank welcomes
cryptocurrencies and even offers products such as Bitcoin exchange-traded
funds (ETFs).
Whereas previously, Warren Buffett called cryptocurrencies contain dangerous
rat poison. The same goes for Buffett's right-hand man, Charlie Munger.
But even though the owners have expressed their personal disdain for
cryptocurrencies and the crypto market, Berkshire Hathaway's latest
investment in Nubank isn't the first time the conglomerate has dabbled in
this market.
Berkshire bought a $500 million stake in Nubank last summer, months before
the company went public in December 2021.
At the time, Nubank announced that this was the largest single investment a
fintech bank has ever received.
While Buffett and Munger may have a personal distaste for cryptocurrencies,
this superstar investment pair may see an entirely different kind of
opportunity in a digital financial services provider like Nubank.
There is great competition among emerging digital banks in Latin America,
where large sections of the population feel underserved by traditional
banking and financial systems.
Companies like Nubank want to tap into a huge potential consumer market of
people who are largely dissatisfied with the existing system.
"There are so many opportunities in the (Latin America) region. The
combination of a large population, terrible customer experience and
exorbitant costs is unmatched," Nubank co-founder Cristina Junqueira told
Fortune last June.
He added, “Around the world, there is no more suitable place to have such a
great opportunity for fintech companies to tackle it.”
Rat Poison
For those of you fans of Warren Buffett, you will remember his statement
about crypto assets being rat poison. Now, the money says otherwise.
Just a reminder, citing express.co.uk, repeatedly saying Bitcoin is a bad
investment. Prior to Berkshire's 2018 annual meeting, he compared
cryptocurrencies to a possible box of rat poison.
“Bitcoin itself creates nothing. When you buy a non-earning asset, what you
rely on is that the next person will pay you more because they are even more
excited if someone else comes along,” he explained to CNBC.
Buffet has mentioned several times about cryptocurrencies. A few weeks
earlier, Buffett, dubbed the “Oracle of Omaha”, argued that investing in
Bitcoin was gambling.
"If you want to gamble, someone else will come and pay more money tomorrow,
that's one type of game. It's not an investment," he explained as quoted by
Express.co.uk.
He also warned investors that Bitcoin and other cryptocurrencies would
"almost certainly" have a bad ending. And, the year before, he stated that
the Bitcoin market was a bubble.
"You can't value Bitcoin because it's not a value-generating asset," Buffett
said.
