Warren Buffett

The question came up, as it always does, at the Omaha meeting in May 2018. Somebody in the arena asked the Chairman of Berkshire Hathaway what he made of this Bitcoin business, and Warren Buffett — the most quoted investor alive, a man who has spent seventy years declining to overstate things — reached for the strongest words he had. Cryptocurrencies, he said, would “come to a bad ending.” And then, sharpening it: “It's probably rat poison squared.”

The phrase was a knowing escalation. His partner Charlie Munger had already reached for plain rat poison; Buffett squared it, the way an arithmetic man would. Bitcoin was trading around US$9,850 that day. The line travelled the way only a Buffett line travels — onto every wire, into every Bitcoin obituary, quoted approvingly by people who agreed and gleefully by people who didn't.

His reasoning was the same reasoning he applies to gold, and it is not a stupid one. An asset, in the Buffett catechism, should produce something — a farm grows corn, a business throws off earnings, a bond pays a coupon. Bitcoin produces nothing. You buy it hoping someone later pays more, which he regards less as investing than as hoping. He has never owned a coin. He has never, by any account, wanted to.

The Bureau records the position faithfully and without argument, because the position is internally consistent and the man is not a fool. We note only the one detail the catechism cannot absorb: a thing that produces nothing has, in the years since he named it, produced the number at the top of this page. The poison, it must be said, kept its appointments. Buffett was measuring whether it deserved to. Those are different questions, and only one of them is answered hourly.