Warren Buffett on Bitcoin: Here's why he believes crypto 'will come to a very bad ending'

After hitting an all-time peak of around $69,000 per unit on November 10, 2021, the world's leading digital currency has since erased roughly 60% of its value, sitting at about $26,800 right now.

To be sure, bitcoin has rallied once again over the last several weeks, up nearly 62% so far in 2023.

But what would the world's most famous investor say to those who might be thinking of buying Bitcoin right now?

“If you ... owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,” Warren Buffett told CNBC earlier this year.

Other than Bitcoin's disappointing track record, here are three more reasons Buffett won’t go near it.

1. Bitcoin has ‘no unique value at all’

The billionaire investor doesn’t like Bitcoin because he considers it an unproductive asset.

Buffett has a well-known preference for stocks of corporations whose value — and cash flow — come from producing things. But cryptocurrencies don’t have real value, Buffett said in a CNBC interview in 2020.

“They don't reproduce, they can't mail you a check, they can't do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person's got the problem.”

Though Bitcoin is intended to provide real value as a payment system, that use is still pretty limited. As Buffett sees it, Bitcoin’s value comes from the optimism that someone else will be willing to pay more for it in the future than you’re paying today.

2. He doesn’t think crypto counts as money

Buffett has made his share of extremely cutting remarks about Bitcoin and cryptocurrency over the years: “I don't have any Bitcoin. I don't own any cryptocurrency, I never will,” he told CNBC back in 2020.

As a tradeable asset, Bitcoin boomed. But does it meet the three criteria of money? According to the most common definition, money is supposed to be a means of exchange, a store of value, and a unit of account.

But Buffett calls it a “mirage.”

“It does not meet the test of a currency,” the billionaire said on CNBC in 2014. “It is not a durable means of exchange, it's not a store of value.”

He adds that it’s a very effective way of anonymously transmitting money. But: “a check is a way of transmitting money too,” he said. “Are checks worth a whole lot of money just because they can transmit money?”

3. He doesn’t understand Bitcoin

Buffett became one of the most successful investors in history by sticking with stocks he understands.

"I get in enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don't know anything about?”

But people like to gamble, he told CNBC after a 2018 Berkshire Hathaway annual meeting, which is another problem with nonproductive assets.

“If you don’t understand it, you get much more excited than if you understand it. You can have anything you want to imagine if you just look at something and say, ‘that’s magic.’”

More: Bitcoin vs. gold: Which is the better investment right now?

How does Buffett pick winning stocks?

The billionaire investor follows the value investing strategy — which focuses on buying undervalued stocks of strong companies and holding them for a long time.

Simple, right?