Buffett no longer 'hates' Bitcoin, invests $1 billion in Latin American digital banking giant Nubank

Warren Buffett has more direct or indirect investments in bitcoin and cryptocurrency-related companies in his portfolio.

Buffett's Berkshire Hathaway dumped some Visa and Mastercard holdings and increased exposure to Nubank, Brazil's largest fintech bank among bitcoin investors in the country Also very popular.

In a filing on Monday (Feb. 14), Berkshire disclosed that it had purchased $1 billion worth of Nubank Class A shares in the fourth quarter of 2021. On the other hand, it sold Visa and Mastercard shares worth $1.8 billion and $1.3 billion, respectively, marking a shift from credit firms to fintech investments.

Buffett is popular for his cautious approach to investing, especially in the hottest areas of the market such as fintech. Buffett has been pessimistic about emerging decentralized financial solutions such as Bitcoin (BTC), deriding it as an asset that "doesn't create anything."

But Berkshire's acquisition of Nubank shows that Buffett's attitude toward fintech companies has recently changed. Berkshire invested $500 million in Nubank in July 2021. After Nubank's (NYSE) debut on the New York Stock Exchange, the company has returned $150 million on its investment through December 2021.

So far, Buffett has not shown any intention to reduce his Nubank holdings.

Buffett's connection to Bitcoin

Buffett's additional investment in Nubank shows his acknowledgment that the fundamental theme of the fintech industry is the digitization of financial services, and his willingness to involve companies related to the cryptocurrency industry.

The trading platform Easynvest, acquired by Nubank in September 2020, has been actively offering Bitcoin ETFs since June 2021. The ETF, called QBTC11, is backed by QR Asset Management and is listed on Brazil's second-oldest stock exchange, B3.

Nubank, which still has exposure to the nascent crypto space through Easynvest, could potentially benefit its top investor Buffett by taking advantage of the additional income opportunity. This is mainly due to the growth of crypto-related investment products in 2021. Notably, their number doubled during the year, from 35 to 80, according to Bloomberg Intelligence, while the total value of their holdings reached $63 billion U.S. dollars, compared to $24 billion at the beginning of 2021.

Bank of New York Mellon chief financial officer Emily Portney noted that digital assets could become "meaningful income for investment banks in the future as bitcoin investment vehicles become more mainstream." source". BNY Mellon is also a company in Buffett's portfolio.

Meanwhile, Leah Wald, CEO of crypto asset manager Valkyrie Investments, predicted an increase in capital inflows into crypto-related investment vehicles, saying they had “started to take off.”

Wald commented: “If you look at inflows from a transaction volume perspective, not only is Bitcoin stable, but you see a lot of institutions jumping in.”

Cryptocurrency-linked companies increase in Buffett's portfolio

While Buffett may not invest directly in Bitcoin, as companies in his portfolio venture into the cryptocurrency space, he is making an indirect investment in the cryptocurrency industry.

In October 2021, just a month before Bitcoin reached an all-time high of $69,000, U.S. Bancorp, the fifth-largest bank in the United States, launched a cryptocurrency custody service for its institutional investment managers, noting that they have witnessed “over the past few years” Growth in demand for funds serving clients”.

In another announcement in October 2021, Bank of America launched a cryptocurrency research initiative, citing “growing institutional interest.”

Bank of New York Mellon also announced that it will hold, transfer and issue bitcoin and similar cryptocurrencies for its asset management clients.

Greg Waisman, co-founder and COO of crypto wallet service Mercuryo, said: "Buffett's investment in Nubank not only means that he is withdrawing his criticism of cryptocurrencies, but also that Buffett is optimistic about the cryptocurrency industry and is indirectly supporting the "digital currency ecosystem". system"."