This is a segment of the Supply Shock Newsletter. Subscribe to read the full edition.
Yes, Warren Buffett is one of the greatest things ever. But he clearly has a Bitcoin blind spot.
Seven years ago today, Buffett famously called Bitcoin “Rat Poison Square” in front of CNBC reporter Becky Quick.
Buffett, 94, just confirmed at the end of the year that he was on the sidelines as CEO of Berkshire Hathaway, and has actually been neging Bitcoin since May 2013. At Berkshire’s annual shareholders meeting, audiences asked Buffett and Munger about the growing importance of Bitcoin.
“Charlie, I hope I know something about this subject, because I don’t know anything,” Buffett said. By that point in 2013, Bitcoin’s price had jumped from $11 to nearly $150 over the past six months.
Munger is dull. “I’m not at all confident about what kind of big universal currency Bitcoin is.”
“It’s certainly going to be a response to my gut,” replied Buffett. “But I’m not really looking into it. We’re not moving to Bitcoin this way out of the $49 billion,” cues the audience’s laughter.
“Well, the truth is that I don’t know anything about it. That doesn’t always stop me from talking about things, but in this case it will.”
It never improved from there. “It’s not a currency, it doesn’t meet the test of currency. You wouldn’t be surprised if it didn’t exist in 10 or 20 years,” Buffett said a year later.
“But away from it. It’s a mi-piro. Basically… the idea that it has some huge intrinsic value is just a joke in my view,” he added a few days later.
There is already a lot of thoughtful criticism of Buffett and Munger’s opinions on Bitcoin. And his investment philosophy doesn’t invest in things he doesn’t understand – is clearly working.
“We need to focus on eight or ten stocks that we think are basically business,” Buffett said in 2018. Berkshire Hathaway’s stock price has since tripled. Meanwhile, Bitcoin prices have increased almost 13 times over the same period, but comparing the two directly makes little sense.
Does that make Buffett wrong? Certainly, the person who bought Amazon instead of Google 10 years ago is wrong. Both Berkshire and Bitcoin have clearly won. Since 1964, the former has returned 5.5 million%, and since 2010 it is almost 137 million%.
No matter how Berkshire is cashed out, it’s still a big time without buying bitcoin.
If Buffett had only been allocated 2% of Berkshire’s $57.9 billion, instead of calling Bitcoin $57.9 billion Macathol in May 2018, the company could have purchased an average of around 137,000 btc.
The same distance today is valued at over $13.1 billion, increasing Berkshire’s current cash holdings by almost 30%.
Don’t kill you is meant to make you stronger. And what you don’t know can’t hurt you. But in the end, it can I’ll make them relatively poor. Even if you’re very rich.
– David
You know the proverb: One man’s mouse poison is another man’s treasure…
If you need to further prove the false positives of Buffett’s worldview, there’s the story of Hypymikey, a BitCointalk user who knows everything he knows he still holds this 100 BTC gold bar, which he posted for sale just 12 years ago.
Today, artifacts exist on social media as a charm from the previous Bitcoin era. One could be someone like Hypymikey, an early forum user who bought this heirloom (along with 25 BTC gold coins) and tried to sell to buy a new car.
