Kevin O’Leary, a once-voiced and well-known investor, has been all-in-the-job in the industry. The renowned “Shark Tank” star is a leading investor at Bitzero, an energy infrastructure company focused on Bitcoin mining.
In a podcast with Beincrypto, O’Leary said that the crypto cycle is here to stay. He confirmed that he is investing in four specific areas: Bitcoin, Ethereum, Stubcoin and Mining. Meanwhile, Bitzero President Mohammed Bahashwain explained why clean energy is the key to successful Bitcoin mining.
Mr. Wonderful’s Great Reversal
Kevin O’Leary’s transformative stance on Crypto exemplifies the experience of many investors jumping from traditional funds to the digital asset sector.
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In an interview with CNBC six years ago, “Mr. Wonderful” described Bitcoin using adjectives such as “worthless” and “trash.” His portfolio is currently full of cryptocurrency investments.
“I own tokens too. There’s an entire research team working on this. If you want to touch cryptography, you only need three positions. Previously, I was 27. But when I look at bitcoin and Etherum volatility and stablecoin for liquidity, that’s all I need to own.
Shark Tank investors added that his previous reluctance to investing in the crypto sector was due to a lack of clarity in regulations.
“We need to remember that at the time, no regulators were on board. It was a hostile regulatory environment not just in the US, but in all geography,” he said.
O’Leary has come a long way ever since. He explained why Bitcoin and Ethereum are the only digital assets besides the stubcoin he bets.
Bitcoin and Ethereum Discussion
O’Leary has a fixed allocation of 2.5% in Bitcoin and Ethereum, but he and Bahashwain discussed different roles in the portfolio.
Bakhashwain highlighted Bitcoin utility as a hedge against inflation. For him, its simplicity and fixed supply make it an ideal asset for the Treasury, looking for a safe place to store value.
“I like to look at Bitcoin like gold. You may have a narrower upside that you can clearly see, but you’re investing in your “grandfather” as Kevin calls it. So that’s why you’re going upside down narrower,” he said.
O’Leary, meanwhile, is more intrigued by Ethereum’s growth potential. He sees it as the foundational technology of currency and the new financial system.
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“Why is Ethereum soaring? Because most investors are aware of how Wall Street is chaining. The moment a genius act passes and stubcoins become legal, where are most of those transactions?
He added that Ethereum offers a sophisticated strategy that will allow investors to make the most of both worlds.
“The reason I put me in Ethereum is simply: I can bet it, I can wrap it in my bitcoin and I can get the yield,” O’Leary told Beincrypto.
But for him, owning a token is not enough. His broader philosophy focuses on owning critical infrastructure.
Beyond Tokens: Investing in Infrastructure
For O’Leary, a successful investment strategy means owning the critical infrastructure that will strengthen the Bitcoin industry.
“If I had to start investing in gold 300 years ago, I would have invested in gold, gold miners, companies that made jeans, picks and shovels, and I would have done much better than owning gold.
Bitcoin mining is a power generation intensive process, and the ability of a company to ensure cheap and reliable energy is its single biggest competitive advantage. This concept sets the foundation for Bitzero’s business model.
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“I’ve never found a company that has lower cost power than Bitzero, and that’s what it’s all about. Bitcoin mining is about power… If you don’t have low cost power, you might not be making money mining,” O’Leary said.
While many Bitcoin miners use expensive or inconsistent energy sources, Bitzero’s strategy involves operating in clean, low-cost, power-rich locations. The company focuses on fundamentals such as energy, permitting and infrastructure, creating a sustainable business model.
This approach also reduces the company’s vulnerability to frequent and unstable fluctuations in the cryptocurrency market.
Avoid US Gridlocks
Bakhashwain explained that the company’s strategy is to ensure electricity in places where clean energy surplus such as Norway and Finland can be acquired at a small cost for other miners.
This approach also helps the company avoid the regulatory and logistical challenges of mining in the US. In the United States, various states vary, and often have complex policies about power and permitting.
O’Leary agreed to this last point. He argued that connecting to the power grid in many states would cause significant interest rate increases for residents, leading to boosts from local authorities.
“Everyone else in this field, they don’t have the power. Everyone is struggling to find power in the US and North American grids, and they’re paying a lot for it,” he said.
Bitzero’s business, especially in Norway, uses surplus hydropower, which would otherwise be wasted. This provides a revenue stream for local governments without increasing costs for residents. It also helps counter Greenwash accusations.
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“The prices of electricity used in domestic use remain the same, and communities (actually) benefit and municipalities are making money from our consumption, which will help us invest more in our communities,” Bahashwein said.
This commitment to a robust business model also explains O’Leary’s strong warning against excessive leverage.
Warnings for the crypto industry
O’Leary provided a strong warning to the entire crypto industry. Avoid excessive leverage.
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He believed that the recent market slump was not the tokens. Instead, he attributed the failures of many companies to their very poor financial management. He sees similar “rookie mistakes” in the crypto space where companies assume large debts.
In contrast, he limits leverage for all assets.
“Anyone with 60% leverage will have to sell stocks at some point. I have a 30% leverage ratio, so if the underlying interest rate or the price of a real estate falls by 50%, I won’t be in a wiped situation,” O’Leary said.
His strategy is to prioritize long-term endurance over short-term profits, allowing him to take advantage of the failures of his over-levered competitors.
“For me, it’s important that people make stupid deals because that’s where I buy assets. I’m the one who’s waiting for my stupid manager to explode with too much leverage.”
This patient strategy allows him to become a “predator” and is ready to scoop up assets from those who have overstretched themselves. For him, the investor’s most powerful long-term assets are a stable business model and a careful approach to risk.
