Peter Thiel’s venture capital firm bets on at least $15 million in bitcoin: report

It’s a Silicon Valley marriage like no other: One of the most controversial figures in Silicon Valley made a massive gamble on one of the industry’s most controversial commodities — and looks to be reaping huge profits already.

Peter Thiel’s venture capital arm, Founders Fund, reportedly amassed $15 million to $20 million in bitcoin, the volatile but quickly rising cryptocurrency, last year. Now, the purchased bitcoin is worth hundreds of millions of dollars.

Thiel’s gamble has been spread across several of the firm’s most recent funds and one bet began in mid-2017, but it is unclear when exactly the Founders Fund began investing in bitcoin. It is also unclear if the Founders Fund sold any of its bitcoin holdings, the Wall Street Journal reported Tuesday.

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Thiel and his Founders Fund, which was created in 2005, is quickly seeing massive dividends. Bitcoin’s price rose 14-fold in 2017, going from a modest digital currency to one of the hottest commodities on the internet.

The Founders Fund saw bitcoin as a high-risk, high-reward commodity and chose to directly get involved, reports the Journal. Rather than going the conventional venture capital route of backing companies working in the space, the Founders Fund directly purchased the cryptocurrency.

There may have been a Thiel bump to bitcoin aftert the report. Bitcoin’s price rose 13 percent to $15,392 in 24 hours after the Wall Street Journal report, according to Quartz.

But bitcoin’s value has been hard to grasp due to its massive peaks and valleys. On Dec. 16, bitcoin hit its all-time high value at $19,343, according to Coinbase, one of the most popular and trusted bitcoin digital exchanges. Less than two weeks later, bitcoin’s value crashed down to $12,630.

Thiel, a libertarian and an outspoken supporter of Donald Trump during the 2016 election, has been optimistic about bitcoin. In an onstage interview at a conference in Saudi Arabia in October, Thiel said bitcoin had “great potential” even if other cryptocurrencies did not.

“I’m skeptical of most of (cryptocurrencies), I do think people are a little bit … underestimating bitcoin especially,” said Thiel. “It’s like a reserve form of money, it’s like gold, and it’s just a store of value…If bitcoin ends up being the cyber equivalent of gold it has a great potential left.”

Thiel’s love of alternate currencies go years back to his days as a PayPal founder. In a Reddit “Ask Me Anything” Q&A in 2014, Thiel said his original goal at PayPal was to create a new currency much like bitcoin.

“PayPal built a payment system but failed in its goal in creating a “new world currency” (our slogan from back in 2000),” wrote Thiel. “Bitcoin seems to have created a new currency (at least on the level of speculation), but the payment system is badly lacking.”

“I will become more bullish on Bitcoin when I see the payment volume of Bitcoin really increase.”

Photo: Peter Thiel delivers a speech at the Republican National Convention on July 21, 2016 at the Quicken Loans Arena in Cleveland, Ohio. (Alex Wong/Getty Images)

 

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