Peter Thiel's Massive Bitcoin Bet Sends Values Surging

Here's why this could be a game-changer.

Getty Images / Drew Angerer

Bitcoin is already surging in price to start 2018, and one particular notorious Silicon Valley mega-investor is likely behind it. Peter Thiel has reportedly decided bitcoin is at least as intriguing an investment as harvesting the blood of the young, resurrecting wooly mammoths, and supporting Donald Trump.

A Wall Street Journal story published Tuesday reports that the Thiel-backed venture capital firm Founders Fund holds hundreds of millions of dollars’ worth of the blockchain-based cryptocurrency. Thiel’s controversial record — which also includes bankrolling the destruction of Gawker and ethically dubious herpes research — has made him Silicon Valley’s most polarizing figure, but his investment track record is strong enough that news of his bet on bitcoin was enough to send its value soaring once again.

Founders Firm is the most mainstream investor yet to have its bet on bitcoin revealed. It comes after weeks in which bitcoin’s meteoric rise had seen significant reversals, with the cryptocurrency nearing highs of $20,000 before losing nearly half its value. That volatility — as well as South Korea’s late December announcement it would begin more stringently regulating cryptocurrency transactions — is part of why Wall Street has kept the skyrocketing asset at arm’s length. Thiel’s move may be sufficient spark to change the calculus for other potential investors.

Bitcoin activity on January 2, 2018.


As of this writing, bitcoin has gained about $1,000 in value since the Wall Street Journal story went live at 1:23 Eastern. The cryptocurrency already appeared to be on a slight upswing over the previous few hours, having gained about $500 from the morning, but the gradual gains turned into a surge at the same time Founders Firm’s activities became public knowledge.

The report indicates Founders Firm initially bought between $15 million and $20 million in the cryptocurrency. For the investment to now be valued in the hundreds of millions, Thiel’s firm likely would have acquired the bitcoin in late 2016 or early 2017, before its meteoric surge in the back half of last year.

The firm’s bet puts bitcoin in the same portfolio as the likes of Facebook, Airbnb, SpaceX, and Lyft, which is damn good company to keep as tech investments go. The Wall Street Journal report says Thiel was personally involved in the decision to buy bitcoin, one that the firm reportedly hopes will help pay to fund a sufficiently larger number of high-risk startups.

This investment does not make Founders Firm the largest holder of bitcoin. That honor is thought to belong to Tyler and Cameron Winklevoss. The tech entrepreneur twins made a smaller initial investment of $11 million, but the fact they did so four years ago when bitcoin was worth only $120 means they are believed to be the world’s first bitcoin billionaires.

Still, the stature of Founders Firm necessarily casts a huge shadow over the cryptocurrency and its future. If 2017 was the year in which bitcoin’s value exploded, 2018 figures to be the year in which investors and governments alike are forced to grapple with this unprecedented asset. The public reveal of Thiel’s big bet has likely just shortened the countdown on when that public reckoning with bitcoin comes, and his support may help the cryptocurrency’s chances as it moves still further into the mainstream.