• Miller, an early believer of Amazon, noted that his average cost per bitcoin before this year was about $500
  • Crypto exchange Coinbase could grow to a $1 trillion market cap as a “pure play” in a fast-growing, disruptive space, Miller says

The risk of bitcoin is going down as crypto adoption rises, renowned value investor Bill Miller said in a recent conversation with author William Green, as Miller is investing in a space he said has “enormous potential.” 

Miller, the founder, chairman and chief investment officer of Miller Value Partners, was among the first big believers in the potential of Amazon. He noted in the discussion, during which he was wearing a bitcoin hat, that he bought the stock a couple decades ago for an average price of $17. 

Amazon stock was selling for about $3,250 at 3 pm ET on Monday.

“I thought you might bring up Amazon … which is the reason I have my bitcoin hat on right now,” he told Green. “I’m willing to go over the waterfall with this one too.”

Miller bought his first bitcoin for about $200, he said, adding that his average cost per bitcoin before this year was about $500. 

“Bitcoin’s a lot less risky at $43,000 than it was at $300, because it’s now established,” Miller said. “There’s been huge amounts of venture capital money that’s gone into it. All the big banks are getting involved with it.”

Bitcoin’s price was about $57,300 as of 4:30 pm ET, according to CoinGecko. The price represents an increase of 2% in the last day and a boost of nearly 19% week over week. 

By mid-June, a record $17 billion of venture capital had already been invested in crypto projects this year.

Among the investors are incumbent banks, who are getting involved in the crypto space in various ways. Last week alone, Bank of America officially launched its digital asset research division and US Bank rolled out its crypto custody services for fund managers.

“Bitcoin is the only economic entity that I’m aware of where the supply of it is unrelated to the demand for it,” Miller said, noting the cap of 21 million bitcoin. “That doesn’t mean that there might not be other things created in the crypto world that could bleed that off, but for bitcoin that’s unique.” 

How many altcoins will last?

While Miller said bitcoin and Ethereum will likely be around for a while, he expects only a handful of the 10,000 or so crypto tokens will prove worthwhile.

The value investor pointed to recent comments from SEC Chairman Gary Gensler, who said that most cryptocurrencies fall under the definition of a security.

“The same sort of regulation that is going on with what the average investor invests in is perfectly appropriate for bitcoin and crypto,” Miller said. “It will lead to almost all those crypto things disappearing unless there’s a real business purpose for them [and] unless they register as securities, as most of the tokens ought to do.”

Beyond bitcoin and Ethereum, Miller mentioned Solana, which industry watchers have pointed to as offering more transactions per second and lower fees than Ethereum.   

“There are protocols that are theoretically superior to Ethereum,” Miller said. “Will they overtake it? I have no idea, but it’s a complex area, and that’s why I tend to stay with Michael Saylor and some of these other people. I own Ethereum, but I own a trivial amount of Ethereum relative to what I own in bitcoin.”

Coinbase’s potential

Crypto exchange platform Coinbase could be “the default position for growth investors” that want exposure to the crypto market without investing directly in crypto assets.  

The company went public in April, reaching a peak valuation during its first day of trading of more than $110 billion. Coinbase, which SkyBridge Capital Founder Anthony Scaramucci said a big bank could try to buy, reported 68 million users, $180 assets on the platform and $462 billion quarterly volume traded, as of June 30. 

Miller noted that the reason Tesla’s market capitalization is larger than all of the big auto companies combined is that it was “the only pure-play” within the big secular change from internal combustion engines to electric engines. 

“If Tesla can be a $750 billion market cap in a mature industry that is never going to grow very fast just because it could hoover up the technological change, Coinbase could easily be $500 billion or a $1 trillion market cap in a rapidly growing secular changing business that is very disruptive.”

  • Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]