Note: I'm not saying they have to agree with it, but if you don't understand his point and are invested in cryptocurrencies you should really be asking yourself how much you really know.
Put option = The maximum loss is the paid premium.
In the short term markets are voting machines, in the long term they are weighing machines. Therefore shorting bitcoin is fairly stupid, as you can easily get run over and margin called or financially ruined if speculative excess continues and increases even if irrational.
By going long, long term put options, unlike shorting a stock, on 5 year puts you a) cant get margin called and lose your shirt and b) They are long term enough that the whole speculative mania is likely to die down over time. And if it doesn't he would only lose the option premium, not an undefined amount of money.
Finally, he considers assets that produce cash flows to be investments, while assets that don't (like gold, fine art, or bitcoin) to be speculation. And while there is nothing inherently wrong with speculation, he doesn't believe it is particularly enrichening either, and that purchasing productive assets is a far better use of his money.
As a student of history, he has read about and witnessed many speculative manias that have ramped speculative assets (as well as investment assets far beyong anby rational value of their cash flows), and presumably think this one is likely to go the same way.
So for a short: Max loss: Unlimited. if BTC rises to $x, you have to pay $x Max Gain: The current value of 1BTC. If BTC drops to zero. you pay nothing but were given the start value.
For a put option: Max loss: The premium, as you don't have to exercise the option Max Gain: strike price minus the premium.
Shorts have a fixed period and put options expire, so if the drop you predict doesn't happen in the time you predict, you can get wiped out even if the drop does happen later.
So In effect buffet is saying he believes it's going down, but either isn't confident about when or admits there is a chance he's wrong.