The Motley Fool

Warren Buffett: Still Not Touching Bitcoin

Image source: Getty Images

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.

Speaking of companies making it big in the current global landscape…

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting...
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago - before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

Click here to discover how!

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).

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.