Ruffer Exited the Bitcoin Market in April with a $1 Billion Profit

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One of the largest public firms with Bitcoin portfolios paid out its final investment in April, long before the cryptomarket crash.

Ruffer, a London-based asset management business, departed the Bitcoin market in April with a profit of slightly more than $1.1 billion for its customers.

In November, a month after Bitcoin’s price began to soar from around $10,500, the business invested $600 million. It made a $750 million profit on some of its assets in December and early January, but it continued going.

“We actively managed the position and by the time we sold the last tranche in April the total profit was slightly more than $1.1 billion,” Hamish Baillie, an investment director at Ruffer, told The Times of London today.

In February, Decrypt identified Ruffer as among the nine public companies with the largest Bitcoin portfolios.

Ruffer quit the Bitcoin market because it predicts that young people—whose trading activity the firm believes kickstarted the bull run—won’t stay at home trading cryptocurrencies when lockdowns ease up.

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The firm has invested its Bitcoin profits in “protective” assets like inflation-linked gilts—government-issued bonds that rise in line with the retail price index.

But Ruffer may come back to Bitcoin, Baillie told The Times.

“If you have a multi-asset strategy then things that behave in different ways are really helpful. There’s no point being multi-asset if all your different assets move with the same dynamics,” he said.

Another Ruffer official stated in February that while the business was “very sceptical” of Bitcoin in 2017, it has changed its stance by 2020. Bitcoin is increasingly developing as an alternative safe haven asset for institutional investors, according to the business.

Ruffer is unconvinced by the environmental critique lately popularised by Tesla and SpaceX CEO Elon Musk. Much of the criticism originates from “hyperbole and misinformation,” according to Baillie, who claims that Bitcoin consumes less power than the gaming sector.

There isn’t much data to support that comparison. A team of researchers at Lawrence Berkeley National Laboratory studied the energy consumption of videogaming in California in 2018. One non-peer-reviewed study that extrapolated this research to global levels estimated that videogames consume 46% more electricity than Bitcoin, though said these are “imprecise estimates” and the figures are likely “pretty close to each other.”

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Baillie added that “probably somewhere between 40 per cent and 70 per cent of the electricity” in Bitcoin comes from renewable sources. That oft-cited wild range comes from mainly two reported sources: A September 2020 report from the Cambridge Centre for Alternative Finance, which puts renewable consumption at around 39%, and a report from crypto asset manager CoinShares, which estimates the figure to be as high as 77.6%.

Baillie also suggested that Bitcoin has enormous social advantages, particularly in less fortunate sections of the world. “[Western] currencies have been relatively stable, but imagine holding bitcoin for the last ten years while living in Venezuela. It’s been a fantastic store of value outside of the monetary system,” he explained.

However, although owning Bitcoin is a solid strategy for Venezuelans, it is no longer sufficient for Ruffer.

 

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