Before going public (IPO) Warren Buffett and Berkshire Hathaway invested in a cloud technology company Snowflake. Buffett has largely shunned tech companies for many years and invested heavily in banks. This trend is starting to change and could benefit Bitcoin (BTC) in the long run.
Why does Buffett usually avoid technology and change the trend?
Buffett has turned his back on technology because of his philosophy of value value investing. In general, you like to evaluate companies based on cash flow, competitive advantage, and overall stability. He said before:
“The key to investing is not assessing how much an industry will affect society or how much it will grow, but rather determining the competitive advantage of a particular company, and most importantly, the longevity of that advantage. Products or services with large and sustainable trenches offer investors rewards. “
Many fast-growing technology companies lack stable cash flow and a predictable long-term growth rate. The technology market landscape doesn’t materially complement Berkshire’s investment strategy or wallet.
But in the last few years Buffett began investing in the technology market. Berkshire has Apple shares valued at $ 117 billion and Amazon shares valued at $ 1.7 billion. Both companies are largely profitable and dominant in their respective markets.
Major holdings in Berkshire Hathaway’s wallet. Source: CNBC
More recently Buffett took an unprecedented step. Berkshire invested in a cloud technology company called Snowflake before going public. Buffett historically stayed out of the tech and IPO markets and The Snowflake deal suggests a changing trend.
Berkshire’s Snowflake Deal has no direct comparison to Bitcoin or cryptocurrencies. But it shows Buffett has started thinking about digitizing many major industries.
In June, the Chief Investment Officer of J Stern Co., Christopher RossbachHe said Berkshire had to adapt to the present. He said the company needed to focus on companies that would generate significant value over the next 25 years. He commented:
“If Berkshire is to have the prospect of generating the value it had in the past, it must adapt by buying these companies that will generate significant value over the next 25 years.”
Berkshire’s recent deals, like the investment in Barrick Gold and Snowflake, show that the company is positioning itself for long-term growth.
Bitcoin could be the pioneer of financial digitization
Over time, The widespread digitization of key sectors would benefit the long-term trend of Bitcoin as many investors view it as digital gold. Cameron Winklevoss, the billionaire investor and co-founder of Twins, said::
“The total amount of above-ground gold on earth fits in an Olympic swimming pool. Physical assets are easier to control, confiscate and censor. Bitcoin lives everywhere and nowhere, its digital nature is one of its greatest strengths. “
Long-term performance of Bitcoin. Source: TradingView.com
Bitcoin has seen exponential growth since 2016, reaching $ 20,000 in 2017.