Crypto Investment Products Witness $2,250,000,000 Worth of Inflows in 2023, up 2.7x Year-on-Year: CoinShares

January 5, 2024 The Daily Hodl

What crypto traders can learn from Charlie Munger — even if he hated BTC

November 29, 2023 Coin Telegraph

Legendary investor Charlie Munger may have once called Bitcoin “rat poison squared” — but that doesn't mean crypto traders should ignore his years of investing wisdom.

Legendary investor and billionaire Charlie Munger, known as the right-hand man of Warren Buffet who helped build investment powerhouse Berkshire Hathaway, has passed away at 99 years of age.

Munger’s family informed Berkshire “that he peacefully died this morning at a California hospital,” according to a company announcement on Nov. 28.

Munger, who served as vice chairman at Buffet’s empire since 1978, accumulated a net worth of $2.6 billion and was routinely praised for adopting a sound investment and stock-picking philosophy throughout his tenure at Berkshire.

While Bitcoin and cryptocurrencies weren’t favored investments for Munger and Buffet, who once referred to Bitcoin (BTC) as “rat poison” and “rat poison squared,” crypto traders could still benefit from Munger’s learnings over his 60 years of investing experience. Here are some approaches to investment that Munger swore by:

Only invest in what you know

Munger said Berkshire Hathaway would often categorize stocks into one of three baskets when evaluating a potential investment.

“We have three baskets for investing: yes, no, and too tough to understand.”

The latter could explain why Munger and Buffet never invested in Bitcoin and cryptocurrencies, but the takeaway message is that they avoided investing in what they didn’t know.

Buffet has previously admitted he and Munger — both regarded as tech skeptics — were “too dumb to realize” the potential of Amazon’s e-commerce business in the 1990s and underestimated the company’s founder, Jeff Bezos.

Berkshire didn’t invest in Microsoft or Google either. “We blew it,” Munger once said, reflecting on the firm’s decision not to invest in Google.

Despite that, Berkshire stuck to the sectors it knew inside out, such as the banking and food and beverage sectors, making huge profits from investments in Bank of America, American Express, Coca-Cola Co, and later Apple after initially deciding not to invest in it.

Charlie Munger’s formula for success is simple and perfect:

- Spend less than you earn
- Invest prudently
- Avoid toxic people and toxic activities
- Defer gratification
- Never stop learning pic.twitter.com/8IiJNngsdg
— John LeFevre (@JohnLeFevre) November 28, 2023

Munger and Buffet also mastered the art of valuation by interrogating a firm’s balance sheet before making an investment decision, which Munger once said is the only intelligent way to invest.

“All intelligent investing is value investing [...] You must value the business in order to value the stock.”

While blockchains and protocols can’t often be valued via a discounted cash flow model or other traditional methods, plenty of insights can be obtained from on-chain data — from the number of daily active users and transaction volumes to total value locked (relative to market cap) and net inflows and outflows, to name a few.

Temperament, not IQ, is a bigger contributor to investment success

Munger was never been one to dive headfirst into a new trend, preferring to stay on the more conservative side of investing.

He’s previously said many “high IQ” people are terrible investors because they have terrible temperaments. “Great investors,” on the other hand, tread with caution and think things through:

"The great investors are always very careful. They think things through. They take their time. They're calm. They're not in a hurry. They don't get excited. They just go after the facts, and they figure out the value. And that's what we try to do."

“You need to keep raw irrational emotion under control,” Munger said in another comment.

Having been in the investment arena for over 60 years, Munger says patience is also of great importance when accumulating wealth.

“The big money is not in the buying or the selling, but in the waiting.”

Build conviction and stomach volatility

Munger has seen Berkshire’s investment portfolio dip several times over the decades, such as the Black Monday crash in 1987, the financial crisis in 2007-2008 and most recently, the COVID-19 pandemic.

He once stressed that long-term investors must learn to stand by their investments when unfavorable macroeconomic conditions trigger market downfalls:

"If you're not willing to react with equanimity to a market price decline of 50% two or three times a century, you're not fit to be a common shareholder and you deserve the mediocre result you're going to get."

“There are going to be periods when there’s a lot of agony and other periods when there’s a boom,” Munger said in a separate comment. “You just have to learn to live through them.”

Charlie Munger has passed away.

RIP to a legend
— Pomp (@APompliano) November 28, 2023

Munger was born on Jan. 1, 1924 — meaning he passed away 34 days shy of his 100th birthday.

"Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom and participation," Buffett said in a statement.

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Google to invest another $2B in AI firm Anthropic: Report

October 28, 2023 Coin Telegraph

Anthropic

Google has already invested $500 million as part of the deal, while the outstanding $1.5 billion will be paid over time, according to the Wall Street Journal.

Google has doubled down on its artificial intelligence bets by investing another $2 billion into AI startup Anthropic, according to a new report.

Google has already invested $500 million upfront to Anthropic — a rival to ChatGPT creators OpenAI — and will pay off the remaining $1.5 billion over time, according to an Oct. 27 report by the Wall Street Journal (WSJ), which cited people familiar.

The mega-deal adds to Google’s $550 million investment into Anthropic earlier in the year.

Google Cloud also striked a multi-year deal with Anthropic a few months ago worth over $3 billion, WSJ revealed, citing a person familiar with the matter.

The news follows Amazon’s massive $4 billion investment into Anthropic late last month.

$GOOGL Agrees to Invest $2 Billion in AI Startup Anthropic - WSJ

- Google, Anthropic Deal Reflects Continued Tech Giant Push Into AI
- Google Investment Follows Amazon's $4 Billion Funding of Anthropic
- Google Previously Invested $550 Million in Anthropic
— Kaushik (@BigBullCap) October 27, 2023

Anthropic is using much of these investments to train its AI systems, such as AI assistant Claude, in hopes that the firm can achieve the next big breakthrough in the AI industry.

On the other side of the fence is OpenAI, who have received more than $13 billion in funding from Microsoft alone since 2019 and continue to build more advanced versions of its own AI chat bot, ChatGPT. The popular chat bot amassed over 100 million users within the first two months of launching in November, which caught the attention of many venture capital firms around the world looking to invest in the space.

The co-founders of Anthropic, siblings Dario and Daniela Amodei, previously worked at OpenAI but left in 2021 following disputes with OpenAI’s CEO Sam Altman over safety implications associated with building AI systems.

Prior to Google and Amazon, Anthropic was largely bankrolled by former FTX CEO Sam Bankman-Fried, who invested about $530 million in Anthropic's in April 2022 — about seven months before FTX collapsed.

Anthropic’s surge in valuation has been viewed as a positive sign for FTX creditors in hopes that they will be compensated fully from FTX’s bankruptcy case.

As SBF testifies, Google announces it's investing another $2 billion in AI company Anthropic

FTX invested $500M in Anthropic — before Google and before Amazon. The company has now raised $7 billion in the past year alone.

FTX's customer hole closer to being shored up pic.twitter.com/bCDAIlL3nK
— Zack Guzmán (@zGuz) October 27, 2023

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Sam Bankman-Fried $500M Anthropic stake irrelevant to case, prosecutors say

October 9, 2023 Coin Telegraph

Sam Bankman-Fried 0M Anthropic stake irrelevant to case, prosecutors say

United States prosecutors argue that the potential for FTX investors to be made whole through the high valuation of Anthropic cannot be presented by Sam Bankman-Fried’s legal team.

United States prosecutors have requested the court presiding over Sam Bankman-Fried’s trial to bar his legal team from making any arguments relating to the potential recovery of FTX customer assets that were invested in Anthropic.

Bankman-Fried invested $500 million in the artificial intelligence startup in April 2022. The U.S. government is set to present evidence that the Anthropic investment was made using misappropriated funds from FTX customer deposits.

Anthropic has made headlines in recent weeks as it looks to raise fresh funds from investors, courting the likes of Amazon and Google which could lead to a valuation of $20 to $30 billion.

U.S. prosecutors note that recent reports focused on the potentially high valuation of the company would also increase the value of Bankman-Fried’s investment, which could increase the potential recovery for FTX customers and other creditors in the FTX bankruptcy.

According to the letter submitted to Judge Lewis Kaplan, the legal teams representing the U.S. government and Bankman-Fried conferred over various issues that could be elicited during cross-examination of witnesses.

Bankman-Fried’s legal team plans to present evidence regarding the current value of the former FTX CEO’s $500 million investment in Anthropic last year.

The prosecutors believe that this evidence is intended to be used to support the argument that FTX customers and other victims would be fully compensated for their losses, which the court has previously indicated as an “impermissible purpose”:

“Such evidence would therefore be wholly irrelevant, and present a substantial danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, and waste of time.”

The U.S. government maintains that its indictment against Bankman-Fried is centred on allegations of wire fraud using FTX customer deposits to make investments and other expenditures. The prosecutors argue that any mention of investments made that might have been profitable are ultimately immaterial and irrelevant to the charges that the jury is considering.

The U.S. government contends that while it plans to introduce evidence of Bankman-Fried’s alleged misappropriation of customer deposits that resulted in massive losses on FTX’s balance sheet, it does not intend to offer any evidence regarding the ultimate losses of victims once the FTX bankruptcy process is complete.

Cointelegraph journalist Ana Paula Pereira is in New York covering the Bankman-Fried trial. The first week of the trial has been centered on establishing how some $8 billion of FTX customer funds went missing from the collapsed cryptocurrency exchange.

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Bitcoin energy pivot achieves what ‘few industries can claim’ — Bloomberg analyst

September 21, 2023 Coin Telegraph

Bitcoin mining

Bitcoin's hash rate has continued to increase and yet its emissions intensity has been trending down, contrary to most other industries, Bloomberg analyst Jamie Coutts explained.

While the Bitcoin network has continued to expand over the years, the Bitcoin mining industry has yet to see a comparable increase in carbon footprint — an achievement that a Bloomberg analyst argues “few industries can claim.”

This, in turn, could drive the next wave of institutional investment.

On Sept. 20, Bloomberg crypto market analyst Jamie Coutts cited data showing that the sustainable energy mix for Bitcoin has continued to rise since 2021, and is now over 50%. This has led to the growth of emissions slowing relative to the network’s continued expansion.

“Bitcoin as a global monetary network is scaling while its carbon impact declines. Few industries can claim this achievement”

He said that the evolving relationship between Bitcoin network growth and the global push to transition from fossil fuels could “catalyze a wave of institutional and even sovereign investment capital.”

The analyst added that as energy constitutes well over 50% of mining's operational costs:

“The incentive to acquire the cheapest energy sources is contributing to the network's rising hash rate while simultaneously reducing the industry's emissions or carbon intensity.”

Bottom Line: If the network scales to hundreds of millions of users, the impact on global carbon emissions will be minimal, and the technology itself is likely to play a pivotal role in the transition away from fossil fuels
— Jamie Coutts CMT (@Jamie1Coutts) September 20, 2023

Energy emissions refer to the greenhouse gases and air pollutants emitted as byproducts from different energy sources and activities whereas carbon intensity measures how clean the electricity is.

On Sept. 18, Cointelegraph reported that the next generation of Bitcoin miners was focusing on alternative energy sources for efficiency.

However, the percentage of sustainable energy used in Bitcoin mining has been a point of debate, as Cambridge University's model (which hasn't been updated since January 2022) stated that mining from sustainable energy sources is just 37.6%.

Climate technology venture investor and activist Daniel Batten, however, argues that this is actually above 50%.

Google is learning pic.twitter.com/xt8flWKN63
— Daniel Batten (@DSBatten) September 19, 2023

He said that the Cambridge figures were out because off-grid mining and methane mitigation are currently not included in its calculations.

Earlier this year, Batten reported that Bitcoin mining emissions intensity had fallen to its lowest-ever level.

Bitcoin Net Zero Emission Tracker. Source: batcoinz.com/@dsbatten

Moreover, he predicted that the Bitcoin network will become carbon neutral by December 2024.

“By 2030, the Bitcoin network is projected to mitigate 10x more emissions from the atmosphere than it produces, an astonishing achievement,” claimed Batten.

Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

New $20M fund eyes blockchain gaming and NFTs

September 6, 2023 Coin Telegraph

New M fund eyes blockchain gaming and NFTs

Alpha Protocol Ventures

Web3 venture capitalists will look to invest in blockchain gaming and collectibles projects through a new $20 million fund.

A group of cryptocurrency venture investors has established a $20 million fund to invest in undervalued Web3 projects and companies focused on blockchain gaming and digital collectibles.

Alpha Protocol Ventures (APV) will look to invest in a variety of projects across the Web3 ecosystem, CEO and founder Vagelis Diamantis told Cointelegraph in an emailed interview. Gaming and collectibles will be a priority focus, he said, while DeFi and layer 1 and 2 protocols will also fall within the scope of the fund's capital allocation.

“We will also explore projects that will try to solve real world problems such as supply chains, data protection and infrastructure.”

APV has drawn funding from Diamantis, Ethernity CEO Nick Rose as well as Web3 investment firm Morningstar Ventures and a group of Web3 angel investors.

Diamantis, formerly CFO of Ethernity, added that APV had identified a number of potential investment targets, while it would add support to “undervalued projects” that were launched as “buy-and-hold funds” including the likes of Polygon, Polkastarter, Axie Infinity and Ethernity.

Diamantis also added that a prolonged bear market still presents an opportunity for investors to get behind projects in their infancy that are developing innovative solutions based on blockchain technology.

“The crypto ecosystem has been through many cycles since it started. It’s a whole new asset class that we think will only grow exponentially.”

Diamantis said that APV would double down on blockchain companies and Web3 applications, targeting undervalued companies and undiscovered blockchain technologies.

Web3 projects and platforms have continued to attract sizeable investments from VC firms and fund managers through 2023.

Animoca Brands announced that it would invest $30 million into Web3 neobank Hi in July 2023, with founder Yat Siu outlining innovative products like it's customizable nonfungible token (NFT)-styled crypto debit card as a potential draw card for Web3 enthusiasts in an exclusive interview with Cointelegraph.

Meanwhile another venture firm, Vessel Capital, announced a $55 million fund that will also look to back Web3 infrastructure and applications in Aug. 2023. That number was eclipsed by cryptocurrency exchange Bitget, which unveiled a reported $100 million fund that would look to target Asia-based Web3 and blockchain projects.

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SEC lawsuits squeeze net worths of Coinbase and Binance CEOs

June 7, 2023 Coin Telegraph

Bloomberg Billionare Index

Brian Armstrong and CZ have seen respective net worth losses of 11.8% and 5.1% since the SEC sued Coinbase and Binance.

The net worths of Coinbase CEO Brian Armstrong and Binance CEO Changpeng Zhao (CZ) have suffered heavy blows due to recent lawsuits by the United States securities regulator.

Armstrong’s net worth was slashed by $289 million and Zhao’s by $1.33 billion within a span of 30 hours after the Securities Exchange Commission (SEC) sued Binance on June 5 and then Coinbase on June 6, according to data from the Bloomberg Billionaires Index and Forbes.

Zhao — the richest man in the crypto industry and the 54th richest person overall — had his net worth fall 5.1% to $26 billion this week.

*The SEC’s lawsuit against Binance has contributed to Zhao falling two spots in Bloomberg's Billionaire Index. Source: Bloomberg*

While the Binance CEO’s net worth has rebounded by over 106% this year, he is still down over 73% from his highest net worth of $96.9 billion in January 2022.

*Zhao’s net worth has fallen from nearly $100 billion to $26 billion since January 2022. Source: Bloomberg*

Armstrong is ranked as the 1,409th richest person by Forbes and took the bigger hit from the SEC’s latest action with his net worth falling 11.8% to $2.2 billion.

*Change in net worth of Brian Armstrong since 2019. Source: Forbes*

The Coinbase CEO has managed to reap the rewards of a market rebound this year, with a 61% increase in net worth over that time.

Despite the recent fall, Zhao and Armstrong have seen net worth increases well above the 9% year-to-date returns for others on Bloomberg's rich list.

The SEC sued both Binance and Coinbase alleging the exchanges broke various securities rules, most notably for purportedly offering cryptocurrencies that the regulator considers to be unregistered securities.

Following the suites, a total of 67 cryptocurrencies have now been classed as securities by the SEC.

Binance and Coinbase have both confirmed they will “vigorously” defend the lawsuits laid against them.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

From cricket to crypto: AB de Villiers ventures into Web3

May 31, 2023 Coin Telegraph

AB de Villiers

South African cricket icon AB de Villiers trades his bat for Web3 as he discusses his love affair with NFTs and a partnership with a novel Ethereum-based investment platform.

AB de Villiers is a household name in the world of cricket, renowned for his swashbuckling batting style and records in the shorter formats of the game. Perhaps less well known is his involvement in the Web3 and cryptocurrency space as he moves on from an illustrious sports career.

The 39-year-old South African sat down for a wide-ranging interview with Cointelegraph as he shifts his attention to the world of Web3. From his love affair with nonfungible tokens (NFTs) to an ambassadorship with a Web3 investment platform, De Villiers has familiarized himself with the ins and outs of the wider cryptocurrency ecosystem.

As the South African explained in the first episode of Crypto and Sport, his personal experience navigating the crypto ecosystem has tossed up some testing deliveries to bat away. It has also led him to become an ambassador for a new Ethereum-based Web3 investment platform looking to open up retail investor access to opportunities in promising new start-ups.

Hands off my Mutant Ape!

De Villiers admits that he kept the crypto space at an arms’ length for a number of years despite the best efforts of Web3 savvy friends and family to compel him to explore the industry as early as 2017.

While his brothers pressed him to invest in Ripple’s native XRP in those early days, De Villiers remained skeptical of the crypto ecosystem and kept his distance, until he started exploring trading more seriously after downloading Trading View:

“I started to follow some of my favorite stuff. Obviously the markets as well, gold, commodities, the Nasdaq and S&P 500. I just found a bit of interest, started reading a little bit about the markets around the world and then obviously also crypto, Bitcoin, Ethereum, XRP were my first interests.”

A couple of years later, NFTs took off with collections like Bored Ape Yacht Club scoring hundreds of millions of dollars in sales. De Villiers brushed up on the intricacies of the space with the help of a friend working in the industry.

A variety of Mutant Apes listed on NFT marketplace OpenSea. With a current floor price around 9.5 ETH, each avatar of the 20,000 strong collection is valued at over $18,000.

Getting to grips with Metamask and its various wallet and network connections, token swaps and blockchain bridges, De Villiers quickly became enamored with collecting NFTs. Describing his experience as being littered with highs and lows, the former Proteas captain was particularly proud of being a Mutant Ape owner which also happened to be his first NFT trade.

“I think I started off with an amazing bang. I bought an M2 mutant ape. Amazing as a first investment. I went straight for the big one. Obviously it's not overboard, but still an M2 is a biggie.”

His dose of NFT dabbling went on for some time, with De Villiers estimating that his NFT trophy cabinet held over 300 digital collectibles before an unfortunate incident left him scrambling. Enticed by a malicious NFT masquerading as a new Pudgy Penguin drop, De Villiers inadvertently gave a hacker access to his wallet by signing a malicious contract more than a year ago:

“I tapped on it, it looked very legit. There was a $1 gas fee. The minute I hit that gas fee, it stalled. I hit it about five times, which ultimately meant that I gave this guy access to my whole wallet.”

De Villiers ended up losing a portion of his collection before sending the remainder of his NFTs to another wallet for safe-keeping and admitted that the experience had made him recognize some of the challenges navigating Web3 for newcomers:

“I made a couple of mistakes and it cost me dearly, but that is something I really want to talk about. For anyone who wants to invest in NFTs, blockchain or Web3, it's all new and it's complicated, or it can be unless you simplify it as much as possible.”

Leveling the investment playing field

The experience also led him to get involved with Common Wealth as an ambassador. The Ethereum-powered Web3 investment platform aims to give retail investors early access to start-ups that are traditionally stonewalled for conventional venture capital investors. It ‘levels the playing field’ for retail investors to invest in high-potential early-stage Web3 projects, as De Villiers tells Cointelegraph.

Ready to level up your investment game? With Common Wealth, you can invest in private VC deals that were once reserved for the few, not the many. Let’s level up the playing field. pic.twitter.com/nJR2G2SC5B
— Common Wealth (@joincommonwlth) May 31, 2023

The platform allows the average investor access to early stage projects and companies at seed and private sale rounds. Users are able to invest in a variety of funds with crypto to access tokenized shares issued as genesis NFTs .

Community investors decide which projects to back through different funds, with voting power proportionate to their investment in a respective fund. Fund NFTs can be sold, traded or fractionalized on the platform or other marketplaces, which affords access to capital that is typically locked up for long time frames in conventional seed investment rounds.

For De Villiers, giving the everyday investor access to an easy to use platform with a low financial barrier to entry to traditionally exclusive early fundraising rounds resonated with his views on financial inclusivity.

He draws parallels to the socio economic landscape in South Africa, with its multitude of cultures and a regrettably large disparity of wealth, and the potential for projects like Common Wealth to tackle inequality:

“I love the fact that the common person, that's why it's called Common Wealth, can get an opportunity alongside the most wealthy person out there, the guy who has been involved with this space for ten years, who knows all the tricks, the ins and outs, this just gives you a level playing field.”

With some 9.5 million followers on Twitter and more than double that on Instagram, De Villiers added that his alignment with the project was assured by the pedigree of individuals behind Common Wealth. Prominent team members include alumni from Google, Activision Blizzard, Intel, Cardano and Facebook that have built the Ethereum-powered mobile optimized platform.

De Villiers continues to adjust to life after an illustrious cricket career that saw him named ICC One Day International player of the year three times. Broadcast work is on the cards for the 39-year-old, while he admits that he’d like to continue exploring the Web3 industry in various capacities, whether it is apportioning investments into BTC, ETH, NFTs and other promising Web3 projects.

That comes with the usual caveat of caution when investing in the cryptocurrency space, given a long history of market volatility and other criticisms of the nascent sector.

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