First of all, you should know that Warren Buffett only invests in assets that he understands very well. Even if he knows about Bitcoin, it doesn’t necessarily mean that he has a deep understanding of it. In fact, this is the first reason why he was critical about Bitcoin.
A Forbes article further expands on his rule, which says that if you don’t understand a business, don’t invest in it.
The flipside? If you understand a business, or a sector, you could have the upper hand when it comes to buying its stock. Your experience may not seem to be financially related, but with the ability to invest in everything from movies to weather, your knowledge might come in handy in the stock market.
You have to understand that Buffett is a value investor, suggesting that he is looking for companies that have value, at least from his viewpoint. He would try to search for undervalued stocks, based on the P/E ratio and other indicators, and would invest in the long term only if he understands how that particular business operates. In fact, this is why Buffett didn’t make up his mind about investing in Apple for a long time.
Since he’s so obsessed with value, he can’t invest in Bitcoin because he doesn’t think it has value at all.
“You can’t value Bitcoin, because it’s not a value-producing asset.”
He also said earlier:
“the idea that [bitcoin] has some huge intrinsic value is just a joke, in my view.”
In 2014, Buffett answered in a CNBC conversation:
“Stay away from it. It’s a mirage, basically.”
So – how can Warren Buffett invest in something that he doesn’t really like? How can he invest in Bitcoin when he sees no value in it?
(Warren Buffett quote) Warren Buffett Quote