Mark Cuban isn't the only Shark Tank star to change his tune on cryptocurrency.
Kevin O'Leary, businessman and star of the popular reality show Shark Tank, has done a 180 on Bitcoin. He had harsh words for the cryptocurrency in 2019, when he called it "garbage" and said that it was a "useless currency." Even earlier this year, he was critical of Bitcoin's lack of usability and the challenge of buying it.
A few months and an incredible bull run have made a big difference. O'Leary recently said in an interview that he put 3% of his portfolio in Bitcoin. He believes it will increase in value, and that it could be like digital gold.
Despite the turnaround, O'Leary still sees a serious potential problem for Bitcoin in its mining process. Here are all the details on why he started buying Bitcoin and his concerns about its sustainability.
Kevin O'Leary's changing position on Bitcoin
O'Leary used to consider Bitcoin worthless, but he now sees it as a hedge against inflation. One factor he mentioned that contributed to his change of heart is the fact that several countries have loosened up restrictions on institutional buying of Bitcoin. That includes his home country of Canada, where regulators have now approved several cryptocurrency exchange-traded funds (ETFs).
The sustainability of Bitcoin is the key issue for O'Leary. He says that he has taken equity positions in miners that pay him back in what he calls a clean coin, or one that has been mined sustainably. He also wants coins like these to be tagged, so that people can know whether they're buying a sustainable Bitcoin.
It's no secret that Bitcoin has a large carbon footprint. The current estimate by the University of Cambridge is that Bitcoin uses 115 terra-watt hours per year, more than what many countries use. O'Leary isn't the only one to raise the issue of Bitcoin's sustainability. Earlier this month, Elon Musk had Tesla suspend Bitcoin payments on environmental concerns.
Not everyone believes in the idea of a clean coin or green Bitcoin, though. There's no evidence of this type of coin existing at the moment. You certainly can't specify that you want a clean coin while buying through any top cryptocurrency exchanges. While a clean coin is possible, most Bitcoin has already been mined. There are currently over 18.7-million Bitcoin in circulation, and the max supply is 21 million.
Kevin O'Leary invests in Bitcoin. Should you?
As Bitcoin has shot up in price, we've seen more big names jumping on board. O'Leary thinks it's digital gold. So does his Shark Tank co-star Mark Cuban, who has said that 60% of his crypto portfolio is in Bitcoin. Numerous celebrities have also expressed support for it.
But those are people with plenty of money to spare. You might be asking yourself should you buy Bitcoin if you don't have millions lying around.
Although you don't need to be a millionaire to invest in Bitcoin, financial stability is a must. Before you consider it, make sure you already have a full emergency fund and are making monthly contributions to a retirement account. Bitcoin is volatile, and you shouldn't risk your present or your future on it.
Assuming you're in a good place financially, investing depends on whether you believe in Bitcoin's long-term potential. Some think mainstream acceptance and the limited supply of Bitcoin could contribute to a rise in value. Others feel that we're in a Bitcoin bubble or that it doesn't serve any real purpose. There's no consensus on whether Bitcoin is a good investment. The best strategy is to research it yourself and come to your own decision.
If you invest in Bitcoin, there is one example to follow from Kevin O'Leary -- make it a small part of your portfolio. He allocated 3% of his portfolio to Bitcoin, which is a reasonable amount. Because of the risk involved with cryptocurrencies, they should be at most 5% to 10% of your portfolio. Keep the rest of your money in investments with a longer track record of success.
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Lyle Daly owns Bitcoin.
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