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Bill Gates: If You Own Bitcoin, You Should Probably Watch Out

Robin Brown
·4 min read
Caution, careful

Bill Gates has recently come out with a bearish view on Bitcoin. In an interview on Bloomberg, he hashed out various topics on climate change such as the electric vehicle revolution, Tesla, and even Bitcoin. When asked about his thoughts on Tesla’s purchase of US$1.5 billion of Bitcoin, Bill Gates stated:

“Elon [Musk] has tons of money and he is very sophisticated. I don’t worry that his Bitcoin will sort of randomly go up or down. I do think people get bought into these manias who may not have as much money to spare. I am not bullish on Bitcoin. You know, my general thought would be that if you have less money than Elon, you should probably watch out.”

Bill Gates: Bitcoin doesn’t produce positive output

Gates argues that, generally, when investing, society hopes to produce some sort of positive output. In his opinion, Bitcoin produces very little tangible positive output. It draws a massive amount of electricity to mine, lacks transparent regulations/governance, and has very little use other than trading. Given Bill Gates’s recent efforts towards creating change in climate, health, and social welfare, his argument is not surprising.

I am not here to discuss the pros and cons of investing in Bitcoin. However, when an influential and wealthy innovator like Bill Gates speaks, it’s not a bad idea to listen. While Bitcoin may hold some fundamental value, which I don’t fully understand, I would rather invest in businesses that produce positive output.

I can understand those fundamentals. Is the business growing revenues, earnings, and cash flows? Are its products useful to society? Are its products/services making the world better? These are questions, I like to ask when I am uncertain about the fundamental nature of a potential investment.

A stock Bill Gates might like more than Bitcoin

Given some of this discussion, one tangible business Bill Gates probably would admire is Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP). It is one of the largest publicly traded, pure-play renewable power stocks in the world. BEP had a very strong year in 2020, and its stock rose by over 60%! In fact, the entire green energy market saw an explosion of investment over 2020.

I like BEP for a number of reasons. Firstly, it operates at a size and scale that Bill Gates likely admires. It can afford to invest in methods, opportunities, and geographies that many other competitors cannot. Currently, it operates nearly 20 GW of wind, solar, hydro, and storage power in four continents. Yet BEP has a huge 18.3 GW development pipeline that could nearly double power capacity over the next decade.

Secondly, BEP has been a consistent grower of dividends and cash flow. Just through organic growth levers, it anticipates growing funds flows per unit by 6% to 11% annually. Likewise, it targets 5-9% distribution growth annually. Since 2012, BEP has grown its distribution by a CAGR of 6%. The stock pays a 2.9% dividend today, but there is still lots of upside from here.

Lastly, BEP has recently pulled back by 12% from its peaks in January. Certainly, this stock is not cheap. However, it is one of the best in its sector and any pullback has been a great opportunity to buy in.

The green bottom line

If you are like Bill Gates and you want to make a difference while producing stable wealth, Brookfield Renewables is a great stock to own. Bitcoin may have its day now. However, I’m not smart enough to estimate what its price will do today, next year, or in 10 years. However, Brookfield Renewable will not only be producing but expanding power production, earnings, and cash flows for many years ahead. That is a bet I would be willing to safely take any day.

The post Bill Gates: If You Own Bitcoin, You Should Probably Watch Out appeared first on The Motley Fool Canada.

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Fool contributor Robin Brown owns shares of Brookfield Renewable Partners. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla.

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