When it comes to crypto opponents in the industry, the well-known Warren Buffett is a well-deserved leader.
From the beginning to the end, Warren Buffett, who adheres to the value investment methodology, has clearly shown his disgust for the illusory digital currency. Well-known quotes are also emerging in an endless stream. At the 2018 annual shareholders' meeting of Berkshire Hathaway, Buffett called Bitcoin and digital currency "rat poison squared."
In an interview with CNBC in 2018, he made it clear that "As far as cryptocurrencies are concerned, in general, I can almost say with certainty that they will end badly. We do not hold any cryptocurrencies, nor do we short any cryptocurrencies, and we will never hold any cryptocurrencies."
Even at the 2022 shareholders' meeting, Buffett's attitude has not changed at all. He still said, "If you tell me you own all the Bitcoin in the world and you sell it to me for $25, I won't accept it, because what will I do with it? I have to sell it to you anyway. It won't do anything."
But it is precisely because of this that his various initiatives on encryption have been watched by the market with a magnifying glass. At the beginning of last year, there were rumors that he had invested in a crypto bank, saying that Warren Buffett, the stock god, finally recognized the value of Bitcoin and invested a total of $700 million in a bank called New Bank.
Although the rumor was decisively refuted later, in fact, Berkshire Hathaway does have crypto-related investments and has earned over $100 million in revenue from it. This company is the parent company of Brazilian crypto bank Nubank, Nu Holdings.
From the perspective of bank stocks alone, Nu Holdings was founded in 2013 and is relatively new among bank stocks, but it targets emerging markets such as Brazil, Mexico and Colombia, and has achieved rapid expansion of the digital financial market. To date, Nu Holdings has accumulated a huge market share, especially in its home market of Brazil. The company has also expanded to two other markets with great potential, Mexico and Colombia, and as of the third quarter of 2024, the company has approximately 9 million customers in Mexico. In Colombia, the total number of customers exceeded 2 million this quarter.
Among them, its flagship product Nubank has contributed greatly. The company currently has 109.7 million global customers, up from 89.1 million in the same period of 23 years. In the third quarter of 2024, 5.2 million new customers were added, achieving an average monthly revenue growth of 25% per active customer, and a total revenue growth of 56% year-on-year, reaching an impressive result of US$2.9 billion.
Nubank, with encryption, is closely related. The bank launched the cryptocurrency platform Nubank Cripto in 2022. The platform initially only supported Bitcoin BTC/USD, Ethereum ETH/USD and aggregate currency MATIC/USD, and then continued to expand to Uniswap UNI/USD and Chainlink LINK/USD, allowing users to send, receive and convert stablecoins including USDC. In September of that year, Nubank also created the Nucoin token on the Polygon blockchain.
Since then, Nubank is further advancing its strategic path of digital assets. In November last year, Nubank also launched a cryptocurrency exchange tool in the application. This feature allows Bitcoin (BTC), Ethereum (ETH), Solana (SOL) or Uniswap (UNI) to be exchanged for USDC at a lower fee. Although Nucoin ended in failure, just recently, Nubank also extended the incentive function for digital dollar USDC holders to all Nubank Cripto users in Brazil. This extension allows to get returns from the minimum balance of 10 USDC in the wallet every day at a fixed interest rate of 4% per year.
It can be seen that Nubank still has an encryption factor, and Berkshire Hathaway has invested in Nu Holdings, so it has also been involved in encryption-related fields. In terms of investment amount, Berkshire initially invested $500 million in Nu Holdings in the G round of financing in June 2021, and then invested an additional $250 million after Nu Holdings' IPO in December, holding a total of approximately 107 million shares of the company. As of now, according to documents filed with the U.S. Securities and Exchange Commission, Berkshire Hathaway has increased its stake in Nu from 0.1% in the fourth quarter ending December 31, 2022 to 0.4% in the third quarter of fiscal year 2024, which is considered to be a positive attitude towards the prospects of this enterprise.
But it is worth mentioning that in terms of the total number of shares, Berkshire Hathaway is reducing its position in the company. It sold some of its shares last year. According to its 13F filing, as of the end of the third quarter, Berkshire's total number of shares held fell from 107 million shares to 86.4 million shares, a decrease of nearly 20%.
This investment did not disappoint Buffett. From the perspective of stock price, although the stock price fell for half a year after the IPO, Nu Holdings' stock price has continued to rise since July 22, from the lowest point of $3.26 to the highest point of $16.145, and then gradually fell back to $11.99. From this year's perspective, Nu Holdings' stock price has risen by nearly 34% year-on-year. Based on the price of $11.99 and 86.4 million shares, the total value of Buffett's holdings has reached $1.035 billion. Compared with his original investment of $750 million, the profit exceeded $285 million, which can be regarded as an indirect share of the encryption.
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But from the core point of view, it is obvious that Buffett is not deliberately going to invest in the crypto field. The most direct point is that Berkshire Hathaway invested in Nu in 2021, but Nu Bank announced its entry into the crypto field and launched Nubank Cripto in May 2022, which is a time difference.
Of course, even if Nu Bank enters the crypto field in advance, it does not necessarily mean that Buffett will not invest. From an investment perspective, Nu Bank is still a potential investment product. First, it has a broad service field. Nu Bank has chosen the emerging market of Latin America, where the market is huge and financial services are growing continuously. Second, it has a clear strategic positioning. The entry strategy of using digital banks as infrastructure can perfectly fit the characteristics of the Latin American market, especially Brazil, which is famous for its high fees, poor services and old infrastructure. Third, the founder is outstanding. Nu Bank was founded by David Velez, a venture capitalist who once worked at Sequoia Capital, and has a relatively strong insight into financial markets and innovative products.
For the above reasons, before Buffett, many well-known capitals have invested in Nu Bank, including Yuri Milner's DST Global, Peter Thiel's Founders Fund, Chase Coleman's Tiger Global and Sequoia Capital. In October 2018, Tencent also invested $180 million in Nubank at a valuation of $4 billion, and Tencent has followed up many times since then.
Even if we put aside the strategy, analyzing Nu Bank's financial report, we can see that it is still a financial company with relatively traditional income. Most of its income still comes from traditional financial products such as credit cards, insurance policies and traditional investment accounts, rather than a complete crypto bank. As of September 30, 2024, Nu's interest-bearing investment portfolio (IEP was $11.2 billion, FXN increased 81% year-on-year. The growth was mainly driven by the growth of the loan portfolio of $5.7 billion and the year-on-year growth of credit card receivables of 33%, and the year-on-year growth of 4% on a foreign exchange neutral basis to $15.2 billion.
Therefore, it is somewhat imaginative to think that Buffett's investment in Nu Bank is a change of attitude. As Buffett mentioned in 2018, "The things I think I know have gotten me into enough trouble. Why should I go long or short on things I know nothing about?" This is indeed the case. As of the end of 2024, Berkshire Hathaway held more than 3250
But it has to be admitted that Berkshire Hathaway is now making investments related to cryptocurrencies, so the stock god may need to restate his previous statement that cryptocurrencies will not have any impact. After all, encryption has more or less brought benefits to Buffett.
With Bitcoin exceeding $100,000, even the most staunch opponents seem to have softened their attitudes. For example, Jamie Dimon, CEO of JPMorgan Chase, Dimon, a well-known opponent of encryption, even said it was a "fraud" and a "Ponzi scheme". He also boasted that if he was in charge of the government, he would shut it down completely. On January 13, he criticized Bitcoin again in an interview with CBS News, saying that it had no intrinsic value and was often abused by bad actors.
But interestingly, JPMorgan Chase bought a large number of crypto ETFs last year. According to documents filed with the U.S. Securities and Exchange Commission (SEC) on May 10, 2024, JPMorgan Chase holds about $760,000 worth of ProShares BITO, BlackRock IBIT, Fidelity FBTC, Grayscale GBTC and Bitwise BITB. In addition, the bank also holds 25,021 shares of Bitcoin Depot, a Bitcoin ATM supplier, worth about $47,000.
Microsoft has similar operations. Founder Bill Gates said in 2018 that cryptocurrencies and NFTs are 100% based on the "greater fool theory" (greater fool theory). Although the Bitcoin theory is a scam, its political legacy is that Microsoft tried to vote to add Bitcoin to its portfolio some time ago.
Even though opposition is evident, the profit-oriented business world often does not make decisions based on attitude. For most companies, it seems to be in line with the old saying that it doesn't matter whether the cat is black or white, as long as it catches mice, it is a good cat.