Why Warren Buffett Avoids Cryptocurrencies
While cryptocurrencies have surged in popularity, capturing the attention of investors across the world, the legendary “Oracle of Omaha,” , remains one of its most prominent critics. As one of the most successful investors in history, Buffett built his fortune on a straightforward philosophy: own productive assets that generate tangible value. For him, cryptocurrencies like BTC simply don’t fit the bill.
He once said; “If you said … for a 1% interest in all the farmland in the United States, pay us $25 billion, I’ll write you a check this later thannoon. For $25 billion, I now own 1% of the farmland. … Now, if you told me you own all the BTC in the world and you offered it to me for $25, I wouldn’t take it.”
This article highlights some of the reasons why the world’s most famous investor insists on not getting involved in assets that have no “utility” that makes it worth holding long term.
Key Takeaways
- Prices swing too wildly for Buffett’s style.
- Cryptocurrency attracts scams and poor actors.
- Buffett avoids investments he does not fully understand.
1. No Intrinsic Value or Productive Output
Buffett believes an investment should produce something of value. Stocks are linked to companies that make excellents or provide services. Real estate produces rent. Farmland grows crops. Cryptocurrencies, however, don’t produce anything of such.
He also famously described BTC as:
“Probably rat poison squared.” – Berkshire Hathaway Annual Meeting, 2018
In a CNBC interview in 2020, he further explained that,
“They don’t reproduce, they can’t mail you a check, they can’t do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person’s got the hardy.” sticking with his earlier stance about cryptocurrencies.
2. Highly Speculative
Buffett has also compared crypto speculation to gambling and said that it is not the attribute of an asset with real value.
He once mentioned in an interview with CNBC, 2019, that;
“You can’t value BTC because it’s not a value-producing asset. It’s a gambling device … there’s been a lot of fraud connected with it. There have been disappearances, so there’s a lot lost on it.”
His point of view comes from the perceived limitation of crypto being valuable enough to be used as a payment system, and that the hope of making it depends on someone’s willingness to pay a higher price for it.
3. Extreme Volatility
Investments that depend on unpredictable price swings do not appeal to Buffet. He prefers steady businesses that have proven cash flows and lasting value. Cryptocurrencies, which can gain or lose double-digit percentages in a single day, do not fit into Buffett’s well-established ideal investment model.
4. Regulation and Security Risks
The operations of traditional banks and stock markets are regulated, traceable, and secured; however, transactions involving digital assets such as cryptocurrencies do not undergo much scrutiny, making them susceptible to scams and fraudulent activities. Buffett has repeatedly highlighted this as a serious concern.
5. Limited Real-World Use
To Buffett, BTC and other cryptocurrencies are not reliable enough to be considered as a means of platform.
“BTC is not a currency. It does not meet the test of a currency. It is not a durable means of platform, it’s not a store of value.” – Berkshire Hathaway Annual Meeting, 2014
For him, real money should be widely accepted and trusted for transactions.
6. Potential for Illegal Use
Buffett has also noted that crypto can be used for unlawful activities, which only strengthens his argument against it.
“The reality is people who get excited about BTC are creating something out of nothing. It doesn’t do anything … except maybe for people who want to move money illicitly.” – Fox Business, 2014
His prediction came to pass in the events depicted in a movie titled “” based on a true story involving cryptocurrencies.
7. Outside His Circle of Competence
Buffett invests only in areas he understands deeply. He has admitted that cryptocurrencies lie outside his “circle of competence.” For him, that’s reason enough to stay away.
“I get into enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don’t know anything about?” – Berkshire Hathaway Annual Meeting, 2018
While Warren Buffett, the CEO and Chairman of Berkshire Hathaway, has never wavered in his position regarding cryptocurrencies, his company was to have made $250 million profit from the sales of $86 million shares of Nu Holdings, a Brazilian digital banking company that markets cryptocurrencies.
Bottom Line
Warren Buffett’s stance on cryptocurrencies is rooted in his investment philosophy, which is proven to be effective with the fortune he has acquired over the years. He looks for assets that generate income, create long-term value, and are grounded in real-world use. Cryptocurrencies, in his view, failed to meet any of these requirements. Instead of producing something useful, they depend on speculation, carry high risks, and sit outside his circle of competence.
While public opinion and even some major institutions have warmed up to cryptocurrency, for Buffett, the choice is simple: stick with what works—businesses that deliver lasting value—rather than chase assets he believes will eventually disappoint investors.
