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Warren Buffett: Still Not Touching Bitcoin

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Adam Othman
·4 min read
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New virtual money concept, Gold Bitcoins
New virtual money concept, Gold Bitcoins

Bitcoin soared to all new heights recently after news that the Tesla (NASDAQ:TSLA) Bitcoin investment hit the market. The cryptocurrency was worth over US$48,600 Thursday, February 11, 2021.

Warren Buffett has never been a fan of Bitcoin, and the chairman of Berkshire Hathaway has even gone on to say that cryptocurrencies have no value because they do not produce anything. He also said in a CNBC interview that he has never bought any crypto and does not plan to buy any in the future.

Since Buffett made that remark, Bitcoin’s value against the US dollar has appreciated more than fourfold. Elon Musk’s investments have led the rally for cryptocurrencies like Bitcoin. The question is: Was Buffett wrong to bash cryptos by calling them worthless, or was Musk right to buy US$1.5 billion worth of Bitcoin?

Elon Musk’s revolutionary perspective

With such a massive stake in the cryptocurrency, it is obvious that the world’s wealthiest man is bullish on Bitcoin. Tesla is even considering accepting Bitcoin as payment for its products in the future. Elon Musk is popularly known for his revolutionary views on several subjects.

His radical ideas to change the world resulted in the likes of Neuralink, SpaceX, and The Boring Company. Buffett calling cryptocurrencies worthless is him speaking from experience as a stock market investor for over 60 years. In that time, he has made a massive fortune while many others have crumbled. It would make sense to take Buffett’s opinion seriously about investment-related matters – even if it negates Elon Musk’s stance on Bitcoin.

Why Musk is the wealthiest person on the planet

It is important to remember that Musk did not become the wealthiest person on the planet by investing in Bitcoin. Acquiring the cryptocurrency is just a way for him to diversify his capital to get better returns. His wealth is primarily due to the Tesla stock.

By the end of 2019, Musk owned over 170 million Tesla shares. The demand for electric cars skyrocketed last year despite COVID-19, and Tesla’s valuation rose almost 800% in 2020.

With an almost 18% ownership of the electric vehicle maker’s total shares, Elon Musk became one of the richest people on the planet. Investing US$1.5 billion in Bitcoin is a relatively easier decision for someone whose net worth is $176.4 billion at writing. You might not want to risk your hard-earned money based on Musk’s desire to make cryptocurrencies mainstream.

Canadian stock to consider

However, you can piggyback on Tesla’s success. As the electric vehicle market keeps growing exponentially, the demand for lithium-ion batteries is rising. Lithium Americas Corp. (TSX:LAC)(NYSE:LAC) is a Vancouver-based resource company focusing on benefitting from the electric vehicle revolution.

LAC is currently constructing two major lithium development projects: The first one is based in Nevada, US, located a little bit of a distance from Tesla’s Gigafactory-1. The second project is being built in Jujuy, Argentina. The company has seen almost 1,600% capital gains since 2016 and its valuation could rise further as its projects get the permits necessary to proceed.

Foolish takeaway

Bitcoin itself may be a risky investment by Musk, but the real reason why he is the wealthiest man in the world right now is because of his electric vehicle manufacturing company. As demand for electric vehicles keeps increasing, companies like Lithium Americas could enjoy significant profits due to the increasing demand for its products in the aftermath. It could be an excellent asset to consider for your investment portfolio.

The post Warren Buffett: Still Not Touching Bitcoin appeared first on The Motley Fool Canada.

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Fool contributor Adam Othman has no position in any of the stocks mentioned. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Tesla and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short March 2021 $225 calls on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares).

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2021