Warren Buffett’s Crypto Bet Rakes in $130 Million Profit in 2023
Despite his negative view on cryptocurrencies like Bitcoin, Warren Buffett is making significant profits from his investment in a crypto-friendly bank. In 2021, Buffett’s firm, Berkshire Hathaway, purchased 107 million shares of Nu Holdings, the owner of Brazil-based fintech company Nubank.
Berkshire initially invested $500 million in June 2021 and increased its stake by another $250 million in December of the same year. According to Berkshire’s second quarter 2023 earnings report, they haven’t sold any shares since then.
The value of Nu’s shares has risen by almost 106% year-to-date (YTD), resulting in Buffett’s $750 million position being worth around $879.50 million. At its peak in February 2022, the position was worth over $1 billion.
Nubank: A Crypto-Friendly Bank
Nubank is considered crypto-friendly due to its divisions offering crypto-related services to over 1.35 million users. This indirect exposure to the cryptocurrency industry makes investing in Nubank attractive.
Easynvest, a trading platform under Nubank, provides a Bitcoin exchange-traded fund (ETF) product. Additionally, Nubank itself offers BTC and ETH trading services. The bank has even launched a loyalty token on the Polygon blockchain.
In May 2022, Nu Holdings allocated 1% of its cash holdings to Bitcoin, showing their belief in the disruptive potential of the cryptocurrency in the financial services sector.
Nubank is the largest fintech bank in Latin America with over 80 million customers in Brazil.
Nu Stocks Outperform Apple and Amazon
While Nu stocks have gained 106% YTD, Buffett’s other top holdings, Apple and Amazon, have seen more modest gains of 36% and 54.65%, respectively. Apple makes up about 45% of Berkshire Hathaway’s investment portfolio.
Moreover, Nu has outperformed Berkshire Hathaway’s own stock, which has risen 9.25% YTD.
Bitcoin Price Performance Matches Nu Stock
This year, Bitcoin has caught up with the price performance of Nu stock, also gaining 106% YTD. The recent surge in BTC price coincides with its decoupling from the stock market in October.
However, some argue that the current BTC price gains are driven by optimism surrounding Bitcoin ETFs. They suggest that a significant downturn in the stock market could bring Bitcoin back to earth.
Hot Take: Buffett Profits from Crypto-Friendly Bank Despite Criticism
Warren Buffett’s investment in Nubank has proven to be a profitable move, despite his negative stance on cryptocurrencies. With Nu stocks outperforming major tech giants like Apple and Amazon, Buffett’s position in the crypto-friendly bank has generated a $130 million profit in 2023.
This success highlights the potential benefits of indirect exposure to the cryptocurrency industry through fintech companies like Nubank. While Bitcoin’s recent price surge may be fueled by ETF optimism, it remains to be seen how the market will react if there is a significant downturn in stocks.
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