Berkshire Hathaway’s Liquid Assets
Berkshire Hathaway currently holds an impressive $347 billion in liquid assets, equaling around 32% of its total market capitalization of $1.1 trillion. This substantial cash reserve could enable the company to acquire approximately 3.52 million bitcoins at the current market price of around $95,000 each.
Market Share Implications
In terms of market share, this would amount to nearly 18% of the total circulating supply of Bitcoin, which currently stands at about 19.69 million coins. If Berkshire decided to utilize its estimated $295.98 billion held in U.S. Treasury bills exclusively for Bitcoin purchases, it could still secure about 3.12 million bitcoins — or roughly 15.85% of the entire supply.
Such acquisitions would significantly surpass the holdings of Strategy Inc. (formerly MicroStrategy), which leads the corporate Bitcoin space with 553,555 BTC, valued at around $52.2 billion as of early May 2023.
Leadership Transition
This potential shift in strategy comes in conjunction with the upcoming leadership transition at Berkshire, where Greg Abel is set to take over as CEO by the end of 2025 from Warren Buffett. Historically, Buffett has been publicly critical of Bitcoin, referring to it as “rat poison squared,” favoring investments that produce tangible cash flows. Abel has not yet made any public statements suggesting a departure from this established perspective.
Market Trends and Future Outlook
However, there are increasing discussions about what this transition might mean for the company’s approach to cryptocurrencies. In the face of Buffett’s criticisms, Bitcoin’s price has surged nearly 900% since 2018, leading many to speculate about long-term corporate adoption in the digital currency space.
Analysts from Bernstein predict that by 2029, corporate treasury investments in Bitcoin could reach approximately $330 billion, driven heavily by smaller firms attempting to replicate the successful investment strategies of larger entities like Strategy Inc. They estimate that Strategy alone could contribute an additional $124 billion to Bitcoin purchases as part of its capital-raising efforts, emphasized by recent plans to secure $84 billion by 2027, which is nearly double its prior goal.
Indirect Exposure to Bitcoin
While Berkshire Hathaway has not yet fully embraced Bitcoin, it has broadened its exposure to the cryptocurrency realm through indirect investments in firms such as Nu Holdings and Jefferies Financial Group, the latter of which holds shares in BlackRock’s iShares Bitcoin Trust.
Though Berkshire’s leadership under Abel may not leap into direct Bitcoin investment immediately, it seems plausible that they might evolve their approach gradually, positioning themselves for potential future involvement in the cryptocurrency market. The exact route that Abel and his team will choose remains to be seen; whether it will involve cautious engagement or more direct involvement is still up for speculation.
