Date
18 October 2018
High-profile venture capitalist Peter Thiel (center) said in October: "If bitcoin ends up being the cyber equivalent of gold, it has a great potential left." Photo: Reuters
High-profile venture capitalist Peter Thiel (center) said in October: "If bitcoin ends up being the cyber equivalent of gold, it has a great potential left." Photo: Reuters

Peter Thiel’s VC firm bought huge amounts of bitcoin: WSJ

Peter Thiel, a high-profile venture capitalist in Silicon Valley, has bought large sums of bitcoin, The Wall Street Journal reports.

Founders Fund, a venture-capital firm co-founded by Peter Thiel, has amassed hundreds of millions of dollars’ worth of the volatile cryptocurrency, the newspaper said, citing people familiar with the matter.

The bet has been spread across several of the firm’s most recent funds, the people said, including one that began investing in mid-2017 and made bitcoin one of its first investments.

As the WSJ reported, Founders Fund bought around US$15 million to US$20 million of bitcoin, and it has told investors the firm’s haul is now worth “hundreds of millions of dollars” after the digital currency’s meteoric rise in the past year.

The purpose of the purchase was to establish a “toehold” in the cryptocurrency space, Bloomberg said, citing a person with knowledge of the matter.

Founders began buying into bitcoin before the recent volatility, and the decision was made by Thiel and Founders’ other investment partners, the unnamed sources told the Journal.

However, it is not known whether the firm has sold any of its holdings. Bloomberg said the fund has yet to return any gains to its investors.

According to the report, Thiel thought bitcoin’s price was very high back in November, and he felt comfortable buying it at about US$2,000 to US$3,000.

Bitcoin, the largest digital currency in terms of market cap, has skyrocketed from around US$1,000 at the start of last year to nearly US$20,000 in mid-December. However, the price fell sharply after it reached an all-time high.

According to research site CoinDesk, bitcoin is trading at US$15,112, after ending 2017 at about US$14,000. Bitcoin surged over 13 percent to nearly US$15,000 following the WSJ report.

As bitcoin’s price rose, trading in the CBOE bitcoin futures was briefly halted in accordance with pre-set rules.

Thiel, 50, who also co-founded digital payments service PayPal Holdings Inc., is well-known for early investments in tech companies such as Facebook Inc.

Founders Fund has more than US$3 billion under management and has taken stakes in more than 100 companies, including Facebook, Airbnb Inc., SpaceX and Lyft.

The VC firm confirmed to Bloomberg that bitcoin infrastructure companies such as BitPay, BitGo, Polychain and MetaStable are in the firm’s portfolio, but declined to comment on the firm’s ownership of bitcoin.

According to the Journal, the VC firm has warned investors that bitcoin could be worth nothing, or close to nothing, in the end.

In an October conference, Thiel compared the digital currency to gold. “If bitcoin ends up being the cyber equivalent of gold, it has a great potential left,” the WSJ quoted him as saying.

“It is like a reserve form of money,” Thiel said.

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