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Warren Buffett doesn’t own Bitcoin, but his company bets $1 billion on this crypto stock
Warren Buffett has made his dislike of Bitcoin known over the years. “As far as cryptocurrencies in general are concerned, I can say with almost certainty that they will end up badly,” he said in 2018. At the time, the price of Bitcoin was around $15,000.
Today, the value of Bitcoin rose above $50,000. Yet Buffett hasn’t changed his tone. Even if someone offered him all the Bitcoin in the world for $25, Buffett said, he wouldn’t take it. “Because what would I do with it?” he asked. “I’ll have to sell it back to you one way or another. It won’t do any good.”
There is an exception to every rule. Buffett doesn’t like Bitcoin, but that doesn’t mean his holding, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), they don’t like it.
Berkshire now has a market capitalization of nearly $900 billion, and Buffett has many expert advisors helping him manage his vast portfolio. Apparently, he or one of his advisors loves a particular stock enough to bet a billion dollars on it. That stock is heavily exposed to the increase in cryptocurrenciesBitcoin included.
Riding the Bitcoin wave
There is an old adage during the gold rush: don’t chase gold, sell picks – you will be sure to profit whether gold is discovered or not. This is exactly the strategy Nu Holdings (NYSE:NU) is following when it comes to profiting from cryptocurrencies.
In 2013, Nu took Latin America’s banking industry by storm under the name Nubank. The argument was simple: For too long the region’s banking sector had been controlled by a handful of powerful players who used their dominant market position to charge customers high fees for simple services.
Born as a digital bank, Nubank began offering low-cost financial products such as bank accounts, credit cards and personal loans to anyone with a smartphone or computer.
Latin America’s appetite for low-cost, easy-to-use financial products has proven overwhelming. In 2014, for example, the bank had almost no customers. This figure has grown every quarter since then, exceeding 90 million in 2023. Remarkably, more than half of Brazil’s adult population are now Nubank customers.
Nubank has done an amazing job adding new financial products as customer growth has taken off. In this way, the company benefits not only from a growing number of customers, but also from those customers who use an increasing number of products.
When Nubank launched, the average customer only used one of its products, the only product the bank offered at the time. Today, new customers start with an average of three financial products, a number that grows the longer they stay with Nubank.
The story continues
One of these new products is Nucripto, introduced in 2022, which allows Nubank users to buy, sell and transact in more than a dozen cryptocurrencies. Bitcoin AND Ethereum included. In its first month of operation, Nucripto gained more than 1 million active users.
Nubank is still at the beginning of its growth in the cryptocurrency industry. It is launching its own digital currency, Nucoin, and continues to add new cryptocurrencies to the platform, including Polka dot AND Avalanche .
The company still makes most of its money from other financial products such as credit cards, insurance policies and traditional investment accounts. But it has a leading position in Latin America’s cryptocurrency market, with more than 1 million active users and a platform that grows stronger every quarter.
Source: Nu Holdings.
A classic Buffett broth?
While Buffett has avoided tech stocks for decades, he has a long history with banks. Berkshire Hathaway owns shares Bank of America AND Citigroupfor example, and owned Wells Fargo warehouse for years.
In many ways, Nubank is a classic Buffett stock. The company was founded by David Velez, a former venture capitalist with experience at Sequoia Capital. In addition to an experienced founder, Nubank also has a strong economic moat. Competitors will have difficulty replicating its business model.
This is because Nubank started from a position of digital priority. The rest of the industry, meanwhile, is largely stuck with a high-cost business model that requires large staff and expensive physical branches.
Nubank can simply move faster and more efficiently than the competition, an advantage that isn’t going away anytime soon. The crypto aspect is just one of the company’s growth drivers, but that’s exactly the point. Nubank offers many in-demand financial products to its growing customer base, and despite rapid growth in recent years, the company has yet to tap most of its potential addressable market.
Stocks aren’t exactly cheap, given the strong recovery in 2023, but investors like Buffett know that it pays to be an early investor in stocks that can grow steadily for decades to come.
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool Company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Ryan Vanzo has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Avalanche, Bank of America, Berkshire Hathaway, Bitcoin, and Ethereum. The Motley Fool recommends Nu. The Motley Fool has a disclosure policy.
Warren Buffett doesn’t own Bitcoin, but his company bets $1 billion on this crypto stock was originally published by The Motley Fool