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Warren Buffett bashes bitcoin at annual Berkshire Hathaway meeting

Yahoo Finance’s David Hollerith joins the Live show to discuss Warren Buffett’s take on bitcoin at the 2022 Berkshire Hathaway Annual shareholders meeting.

Video Transcript

BRAD SMITH: Welcome back to Yahoo Finance Live, everyone. Warren Buffett, AKA Buffett the stock market slayer, remained on par for his course, at least, on his Bitcoin stance during the Berkshire Hathaway annual shareholders meeting in Omaha, Nebraska on Saturday. Here with more, we've got Yahoo Finance's David Hollerith. David, between Warren Buffett and Charlie Munger, we've heard Bitcoin called rat poison squared and disgusting, respectively, I believe. And the tenor continued over the weekend. So how is the cryptocurrency world reacting?

DAVID HOLLERITH: That's right. You know, I think, Brad, at this point, it is par for the course. The Oracle of Omaha, you know, he said he would not buy all the Bitcoin in the world if it was worth-- it would not be worth $25. And I think added to that, the reactions from the cryptocurrency investor class, at least over social media, was pretty apparent in that it's what they expected, yet it still hurts. It hasn't the price too much. Bitcoin has been taking up a little bit over the past day. It's fallen down a little bit over the weekend.

But I'll add a little bit more explanation to what Buffett said. He sort of gave more detail to why he could find or finds Bitcoin rat poison squared. And what he added essentially was that Buffett got back down to the fact that Bitcoin still doesn't really have a fundamental value or a way for analysts to fit its valuation based on something like a stock, which has cash flows, obviously.

So he got into the idea basically of a productive versus unproductive asset, sort of saying that it's hard to classify something as having any value if you're not actually getting any money out of it outside of what other people will pay for it. This has been, for a long time, the fundamental criticism, I think you would say, of Bitcoin similar to gold in that it doesn't have any cash flows. And there's really no value that's earned from it. That being said, there is a way to earn money by staking crypto assets, but that's sort of another topic altogether.

But just to quote him, he said, to have value, assets have to deliver something. And so this was sort of echoed by Munger, who said-- Charlie Munger, Buffet's long-term investing partner, who said, in my life, I try to avoid things that are stupid and evil and make me look bad, and bad in comparison to somebody else, and Bitcoin does all three. Munger also added that Bitcoin is evil because it undermines the US Federal Reserve system.

Now power players more on the Silicon Valley side of the financial world, Marc Andreessen and Elon Musk, both tweeted reactions. Andreessen sort of criticized Buffett's other investments for enabling diabetes, while Elon Musk more so just hit on the fact that Buffett said Bitcoin so many times. I don't think there's a lot of content to this more so than just the thesis that a lot of people, a lot of larger players in the technology sector disagree with Warren.

BRAD SMITH: Yeah, we're going to continue to see what Warren perhaps does or doesn't say about Bitcoin to this point in time. But we do know in the world of cryptocurrency elsewhere, there was also this Ethereum network crash, we should say. And this was prompted by a Bored Ape Metaverse kind of launch that took place. And so what more can you tell us about that? Because as I understand it, it wasn't the price of Ethereum that crashed. It was the actual consensus model. Break this down for us.

DAVID HOLLERITH: That's right, Brad. So, also on Saturday around 9:00 PM, the Bored Ape Yacht Club creator Yuga Labs opened a virtual land sale for their previously announced Metaverse called Other Side. So the deeds, which are issued as NFTs for the land sale, are called Other Deeds. And about 55,000 parcels of virtual land, these Other Deeds, were issued as or listed as NFTs and sold on Saturday night on NFT marketplaces such as OpenSea.

Now, what happened was leading up to this, the value and price of these NFTs ranged somewhere between $5,000 and $7,000, based on the price of Ethereum. Now, they listed these land sales on Saturday night in order to-- what can be assumed to find a time of the lowest amount of buying, but that still didn't stop sort of congestion in terms of transactional demand on the Ethereum network to skyrocket which, in turn, causes the cost for transactions to also increase. In this case, investors paid anywhere from $5,000 to $6,000 on NFT transaction fees across Ethereum. So what you had essentially were investors paying just as much for the transaction costs as they were for these Metaverse parcels of land.

Now, the temporary crash of the Ethereum network was more so what had happened is that it just slowed down, whether how much transactions could be processed on Ethereum. Now it's not anything that has halted the blockchain permanently, but we have seen Ape Coin, which is sort of the cryptocurrency related to this Other Side Metaverse, it rose a lot, leading up to the land issuance. And since then, Ape Coin has fallen by more than 40% as of this morning and now hangs at $15 per coin.

BRAD SMITH: Yeah, 24% lower for Ape Coin over the past two days in aggregate there. Yahoo Finance's David Hollerith breaking down all things crypto in that space over the weekend. David, appreciate the breakdown there.

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