Legg Mason's Bill Miller: Buffett is Wrong About Bitcoin

Bill Miller reiterated his support for bitcoin today, taking aim at past statements by famed investor Warren Buffett.

AccessTimeIconApr 10, 2014 at 2:32 p.m. UTC
Updated Sep 14, 2021 at 2:07 p.m. UTC
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In an interview on CNBC's popular morning program 'Squawk Box', Legg Mason's Bill Miller dismissed Warren Buffett's statements on bitcoin as flawed.

The former Legg Mason CFA, chairman and CIO, and current portfolio manager for the Legg Mason Capital Management Trust reiterated his support for bitcoin, directly addressing the legendary investor's opinions on the subject in the process.

Buffett has been outspoken in his views about bitcoin as an investment, calling its value a 'mirage' and urging investors to 'stay away’ from the digital currency, though his statements have suggested he sees value in bitcoin's underlying technology.

In contrast, Miller has been open about owning bitcoin and what he sees as its potential to maintain and grow its value long-term.

— Squawk Box (@SquawkCNBC) April 10, 2014

Overall, Miller was respectful when disagreeing with Buffett, though he suggested that the investor's thinking on the matter was misguided, stating:

"I have enormous regard for Warren, but I think there's a logical flaw in his thinking here. It may very well be the case that bitcoin is worth nothing, but I think it's a really interesting intellectual and technological experiment."

Miller's support is also notable considering that he has actually lost money investing in bitcoin, as he reported that his BTC holdings have declined 20% to date.

— Squawk Box (@SquawkCNBC) April 10, 2014

Bitcoin is not a check

In his 14th March interview on CNBC, Buffett compared bitcoin to checks or money orders, arguing that since its primary value was as a payment system, the idea that it could be a worthwhile investment was incorrect.

However, notably, Miller took direct aim at these statements on CNBC:

"[Checks] have no value because they are infinitely creatable. There are 12m bitcoins out there and there will [only ever] be 21m. If there were 21m checks in the world and that was all there were, and all transactions went through checks, checks would be very, very valuable."

Still, Miller agreed with Buffett on his point that the main benefit of bitcoin was its use as a payment system.

"I think he had it exactly right in that its main value, potentially, is as a payment system. [It's] potentially disruptive as you can send it anonymously, you can send it without paying the interchange fees and that kind of thing."

Bitcoin will be the lasting digital currency

Miller also weighed in on the subject of whether bitcoin could face competition from any of its available alternatives, citing the popular theory of path dependance, which attempts to explain why the first-to-market solution is often the one that becomes most widely used.

Miller listed historical examples of this phenomenon, noting that the most efficient or best ideas don't always win out. Specifically, he cited the fact that "beta was better than VHS", and that "the QWERTY keyboard was not the most efficient way to type".

Explained Miller:

"Once you reach a certain state, it becomes very difficult to dislodge that. I think bitcoin has probably won that, less so cryptocurrencies."

Miller also weighed in on why bitcoin is a preferable investment to gold.

— Squawk Box (@SquawkCNBC) April 10, 2014

About Miller

Miller has achieved notable successes during his lengthy career at Legg Mason, most recently when overseeing the Legg Mason Opportunity Trust, a fund that focuses on assets with large gaps between price and intrinsic value.

In 2013, the fund was number one in The Wall Street Journal's ranking of diversified US-stock mutual funds with more than $50m in assets for three straight quarters, according to MarketWatch.

Historically, Miller's track record has also been impressive. From 1991 to 2005, the Legg Mason Capital Management Value Trust, which Miller co-managed, achieved the unlikely feat of beating the S&P 500 Index for 15 straight years.

Image via CNBC


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