As criticisms on digital assets thickens worldwide, billionaire Bill Gates dismissed cryptocurrency projects such as nonfungible tokens (NFTs) as shams “based on the greater-fool theory” at a climate conference.

“Obviously, expensive digital images of monkeys are going to improve the world immensely,” the Microsoft billionaire said while speaking at an event in California hosted by TechCrunch. The billionaire said he’s neither long nor short the asset class.

"I am used to asset classes where like a farm they have output or a company where they make products. Having an asset class that is 100 percent based on sort of greater fool theory that somebody is going to pay more for than I do," he added. 

The greater fool theory argues that prices go up because people are able to sell overpriced securities to a "greater fool," whether or not they are overvalued.

Cryptocurrencies are entering the deepest phase of a bear cycle. The fundamentals of bitcoin are now deteriorating, and long-term holders are now realising major losses, according to strategists at Glassnode, a blockchain data and intelligence provider. 

The world's leading digital asset, Bitcoin, dropped as much as 5.2% to $20,833 early Wednesday in London.

According to estimates, the cryptocurrency market saw its total market cap drop by roughly 12% on Monday to just $980 billion. The sector has now seen more than $2 trillion in losses since its November 2021 peak.

Last year, Gates deplored cryptocurrencies, saying bitcoin is too risky for retail investors and stressed on the environmental harm of mining coins.

He was speaking at the TechCrunch event on Tuesday as the founder of Breakthrough Energy Ventures, an umbrella name of several organizations, founded by Bill Gates in 2015, that aim to accelerate innovation in sustainable energy and in other technologies to reduce greenhouse gas emissions.

(Reporting by Seban Scaria; editing by Daniel Luiz)