Berkshire Hathaway's Cryptocurrency Paradox: Buffett's Reluctance and the Massive NuBank Investment

Berkshire Hathaway's Cryptocurrency Paradox: Buffett's Reluctance and the Massive NuBank InvestmentWarren Buffett's negative views on cryptocurrencies are well-known. He has repeatedly voiced strong reservations, even likening them to "rat poison

Berkshire Hathaway's Cryptocurrency Paradox: Buffett's Reluctance and the Massive NuBank Investment

Warren Buffett's negative views on cryptocurrencies are well-known. He has repeatedly voiced strong reservations, even likening them to "rat poison." Paradoxically, however, Berkshire Hathaway, under Buffett's leadership, has quietly invested millions of dollars in Nu Holdings Ltd., a Brazilian fintech company deeply intertwined with the cryptocurrency market. Nu Holdings' stock price has subsequently seen significant growth, experiencing a near 34% year-over-year increase. This move has sparked widespread speculation about Buffett's investment strategy and a potential shift in his attitude towards cryptocurrencies.

Buffett's negative stance on cryptocurrencies is longstanding. At Berkshire Hathaway's 2018 annual shareholder meeting, he explicitly stated that Bitcoin is "probably rat poison squared," and asserted that cryptocurrencies "almost certainly will come to a bad ending." He emphasized that Berkshire Hathaway had never owned, shorted, or would ever own any cryptocurrencies. This strong rejection sent a clear signal to the market: Buffett and his company would steer clear of this volatile, nascent asset class.

However, reality contrasts sharply with Buffett's public pronouncements. Berkshire Hathaway has invested in Nu Holdings, a rapidly growing digital bank in Brazil. Crucially, Nu Holdings is not a traditional bank; it actively embraces cryptocurrencies and has launched its own cryptocurrency trading platform, Nubank Cripto. Initially supporting Bitcoin, Ethereum, and Polygon, the platform has expanded to include Uniswap and Chainlink, offering users a comprehensive service for sending, receiving, and converting cryptocurrencies.

According to Nu Holdings, Berkshire Hathaway initially participated in its Series G funding round in 2021, investing $500 million, later adding another $250 million. This substantial investment suggests that even with his caution towards cryptocurrencies themselves, Berkshire Hathaway sees immense potential in Nu Holdings as a technology-driven financial institution, recognizing its growth prospects in Brazil and the wider Latin American market.

SEC filings reveal a steadily increasing stake in Nu stock held by Berkshire Hathaway. This grew from 0.1% at the end of Q4 2022 to 0.4% in Q3 of fiscal year 2024. This means Berkshire Hathaway held over 86 million shares of Nu stock by the end of Q3 fiscal year 2025, valued at nearly $1.2 billion. This significant investment makes Buffett's relationship with cryptocurrencies considerably more complex and intriguing.

This seemingly contradictory behavior might be explained by Berkshire Hathaway's investment strategy. While Buffett holds negative views on cryptocurrencies, he doesn't necessarily oppose investing in companies related to them. Nu Holdings' business model doesn't entirely depend on cryptocurrency trading; its core business remains traditional banking services such as savings accounts, loans, and payment services. Therefore, Berkshire Hathaway's investment might be driven more by Nu Holdings' position and growth potential in Brazil's thriving fintech market than by an endorsement of its cryptocurrency operations.

This interpretation is somewhat supported by Buffett's own statements. At the 2022 Berkshire Hathaway shareholder meeting, when asked about his opinion on Bitcoin, he reiterated his negative assessment, stating he wouldn't buy all the Bitcoin in the world for $25. This demonstrates that Buffett's skepticism towards cryptocurrencies persists, and his investment decisions are based on an assessment of Nu Holdings' overall business model, not an endorsement of the cryptocurrency market.

Nevertheless, Berkshire Hathaway's massive investment in Nu Holdings, and Nu Holdings' significant stock price appreciation, undoubtedly casts doubt on Buffett's stance on cryptocurrencies. While Berkshire Hathaway's investment strategy remains largely conservativeholding over $325 billion in cash and equivalents (mostly US Treasuries) at the end of 2024, according to quarterly financial reports, indicating avoidance of significant investment in hot stocksthe Nu Holdings success story might signal that Buffett and his team are gradually adapting to and exploring this rapidly developing market.

Meyer Shields, managing director at boutique investment bank Keefe, Bruyette & Woods, commented, "Berkshire has been successful for decades doing it the boring way." While suggesting Berkshire Hathaway's conservative investment approach, this remark also highlights the company's exceptional risk management and long-term investment capabilities. The Nu Holdings investment might represent a cautious foray by Berkshire Hathaway, attempting to indirectly share in the potential gains of this emerging market without direct involvement in the cryptocurrency market itself.

In conclusion, Berkshire Hathaway's investment in Nu Holdings is a paradoxical and complex case. It reflects Buffett's continued skepticism towards cryptocurrencies while simultaneously demonstrating Berkshire Hathaway's flexibility in adapting to emerging markets. The long-term impact of this investment decision will unfold with Nu Holdings' development and the evolution of the cryptocurrency market, potentially further influencing Buffett's and Berkshire Hathaway's overall stance on cryptocurrencies. This remains a case worthy of continued observation, monitoring its influence on Berkshire Hathaway's future investment strategies and Buffett's ultimate assessment of cryptocurrencies.