Billionaire investor and Berkshire Hathaway CEO Warren Buffett, his confidant Charlie Munger and Microsoft co-founder Bill Gates damped the recent rally in cryptocurrencies with their renewed criticism.
At the Berkshire annual shareholder meeting on Saturday, Buffett said that Bitcoin was “probably rat poison squared.”
“It’s buying something because you expect the pool of people who want to buy it because they want to sell it to somebody else will grow,” he said on CNBC’s Squawk Box on Monday.
Bitcoin has been rallying since the start of May and reached near $10,000 on Friday. However on Monday, the top cryptocurrency by market cap was trending lower along with its peers.
As of 7.26 am ET on Tuesday, Bitcoin was down 1.13 percent at $9,219 on Coinbase.
The Oracle of Omaha said Bitcoin was a nonproductive asset as it creates nothing. In other words, he meant cryptocurrencies do not have intrinsic value. You are simply counting on whether the next person is interested in paying you more, he said.
“If you go back to the time of Christ, and you look at how many hours we had to give up in order to buy an ounce of gold and you take it forward to now, you’ll find the compound rate may be a tenth or two-tenths of 1 percent, … but it doesn’t produce anything,” Buffett said.
During the Berkshire meeting, Buffett said all cryptocurrencies are set to have “bad endings,” reiterating his remark from January.
“It’s something where people who are of less-than-stellar character see an opportunity to clip people who were trying to get rich because their neighbor’s getting rich buying this stuff neither one of them understands,” the famous investor said during the meeting. “It will come to a bad ending.”
Putting money on Bitcoin is only a gamble, not investing, he told Yahoo Finance in an interview at the start of this month.
Buffett has been a longtime critic of Bitcoin and cryptocurrencies. Back in 2014, Buffett had told CNBC that Bitcoin and its peers were a mirage and it was a joke that they had some huge intrinsic value.
In January, he said, “If I could buy a five-year put on every one of the cryptocurrencies, I’d be glad to do it but I would never short a dime’s worth.”
At the Berkshire meeting, Vice Chairman Munger said cryptocurrencies were “just dementia”.
“And I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, ‘I can’t be left out,” he added.
In an interview to Yahoo Finance after the meeting, Munger said the whole cryptocurrency business was “anti-social, stupid, immoral…” and “the people pushing it are a disgrace”.
Meanwhile, Munger was positive on the blockchain distributed ledger technology underlying Bitcoin.
“They’ve actually created a product that’s hard to create more of, but not impossible. Now that is very peculiar. But they’ve managed to do it,” he told Yahoo Finance.
Speaking on the CNBC Squawk Box on Monday, Munger said, “Bitcoin is worthless, artificial gold.”
On the same show, Microsoft’s Bill Gates said Bitcoin was “kind of a pure ‘greater fool theory’ type of investment” and “completely crazier, speculative.”
“I agree I would short it if there was an easy way to do it,” he added.
by Jyotsna V