Once a vocal crypto skeptic, high-profile investor Kevin O’Leary has gone all-in on the industry. The prominent “Shark Tank” star is now a key investor in Bitzero, an energy infrastructure company focused on Bitcoin mining.
In a podcast with BeInCrypto, O’Leary stated that the crypto cycle is here to stay. He confirmed that he invests in four specific areas: Bitcoin, Ethereum, stablecoins, and the mining industry. Meanwhile, Bitzero President Mohammed Bakhashwain explained why clean energy is the key to successful Bitcoin mining.
Mr. Wonderful’s Great Reversal
Kevin O’Leary’s transformative stance on crypto exemplifies the experience of many investors who have leapt from traditional finance to the digital assets sector.
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In an interview with CNBC six years ago, “Mr. Wonderful” used adjectives like “worthless” and “garbage” to describe Bitcoin. Now, his portfolio is filled with cryptocurrency investments.
The Shark Tank investor added that his earlier hesitation to invest in the crypto sector was due to its lack of regulatory clarity.
O’Leary has come a long way since then. He explained why Bitcoin and Ethereum are the only digital assets besides stablecoins he is betting on.
The Bitcoin vs. Ethereum Debate
While O’Leary has a fixed allocation of 2.5% in Bitcoin and Ethereum, he and Bakhashwain discussed their differing roles in a portfolio.
Bakhashwain emphasized Bitcoin’s utility as a hedge against inflation. For him, its simplicity and fixed supply make it the ideal asset for treasury departments looking for a secure place to store value.
On the other hand, O’Leary is more intrigued by Ethereum’s potential for growth. He sees it as a currency and the foundational technology for a new financial system.
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He added that Ethereum offers a sophisticated strategy that allows investors to get the best of both worlds.
But for him, simply owning tokens is not enough. His broader philosophy focuses on owning the essential infrastructure.
Beyond Tokens: Investing in the Infrastructure
For O’Leary, a successful investment strategy means owning the essential infrastructure that powers the Bitcoin industry, a concept he calls his “picks and shovels” theory.
Bitcoin mining is a power-intensive process, and a company’s ability to secure cheap, reliable energy is its single greatest competitive advantage. This concept sets the foundation of Bitzero’s business model.
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While many Bitcoin miners use expensive or inconsistent energy sources, Bitzero’s strategy involves operating where clean, low-cost power is abundant. The company’s focus on fundamentals, like energy, permits, and infrastructure, creates a sustainable business model.
This approach also makes the company less vulnerable to the frequent, volatile swings of the cryptocurrency market.
Avoiding the US’s Gridlock
Bakhashwain explained that the company’s strategy is to secure power in locations with a surplus of clean energy, such as Norway and Finland, where they can acquire it for a fraction of the cost of other miners.
This approach also helps the company avoid the regulatory and logistical challenges of mining in the US, where different states have varying and often complex policies regarding power and permits.
O’Leary agreed with this last point. He argued that hooking up to the power grid in many states can cause significant rate increases for residents, leading to pushback from municipal authorities.
Bitzero’s operations, particularly in Norway, use surplus hydroelectric power that would otherwise go to waste. This keeps power costs low and provides a revenue stream for local municipalities without increasing residents’ costs. It also helps counter greenwashing accusations.
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This commitment to a solid business model also explains O’Leary’s powerful warning against excessive leverage.
A Warning to the Crypto Industry
O’Leary offered a powerful warning for the entire crypto industry: avoid excessive leverage.
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He believed that recent market downturns were not the tokens’ fault. Instead, he attributed the failures of numerous companies to their very poor financial management. He sees a similar “rookie mistake” in the crypto space where companies take on massive debt.
He, by contrast, limits the leverage on all his assets.
His strategy is to prioritize long-term endurance over short-term gains, allowing him to capitalize on the failures of over-leveraged competitors.
This patient strategy allows him to be a “predator,” ready to scoop up assets from those who have overextended themselves. For him, an investor’s most powerful long-term assets are a stable business model and a cautious approach to risk.
Source: https://beincrypto.com/shark-tank-kevin-oleary-discusses-bitcoin-ethereum-bitzero/
