Crypto Journalist
Amin Ayan
Crypto Journalist
Amin Ayan
Share
Bitcoin is trading at a steep discount to its “energy value,” a proprietary metric from Capriole Investments that places the cryptocurrency’s fair value at up to $167,800, according to the firm’s founder, Charles Edwards.
Key Takeaways:
- Capriole’s Energy Value metric estimates Bitcoin’s fair value at up to $167,800.
- The model links Bitcoin’s valuation to mining cost and scale.
- Sustained price growth relies on consistent energy input.
In a post on X Thursday, Edwards said the current Bitcoin price of around $116,000 is roughly 45% below where it should be based on the model.
Developed in 2019, the Energy Value metric calculates fair value using a combination of energy input, supply growth rate, and a constant representing the fiat dollar value of energy.
Bitcoin Valuation Model Links Price to Mining Cost and Scale
The model ties Bitcoin’s worth directly to the cost and scale of mining activity.
If miners were to shut down entirely, the metric suggests Bitcoin would be worth zero. Instead, record hashrates, the computing power securing the network, point to a strong valuation.
Glassnode data shows Bitcoin’s hashrate recently hit 1.031 zettahashes per second, reaching an all-time high on August 4.
“Hash Rates are flying and Bitcoin Energy Value just hit $145K,” Edwards wrote, noting that this puts the market price at a 31% discount to value.
In his view, the current discount is deeper than in September 2020, when Bitcoin traded at $10,000.
Energy Value has climbed as high as $167,800 in recent weeks, underscoring the gap between market price and network fundamentals.
Edwards warned, however, that this fair value could decline if miners reduce their energy commitment.
Capriole’s framework suggests that sustained price growth depends on consistent energy input, with higher market prices incentivizing miners to increase hash power and improve efficiency.
Historically, when Bitcoin’s market price surges without a matching increase in energy input, it has tended to fall back toward its Energy Value.
Supporting the bullish outlook, Bitcoin’s Hash Ribbons indicator, a measure of miner health, flashed a new “buy signal” in late July, reinforcing expectations for continued price strength in the months ahead.
Pension Funds Could Push Bitcoin to $200K by 2025
Standard Chartered, in a February note, projected Bitcoin could reach $200,000 by the end of 2025, with pension funds expected to be key drivers.
“We expect institutional flows into Bitcoin in 2025 to exceed 2024 levels,” the bank wrote, pointing to long-only funds such as state pensions as the next major inflow source.
In June, Billionaire Philippe Laffont, founder of Coatue Management, also included Bitcoin in his “Fantastic 40,” a handpicked list of what he considers the top investment opportunities for the next five years.
The hedge fund billionaire ranked Bitcoin alongside Microsoft, Nvidia, Amazon, and Meta, notably excluding Apple and Google from his top five.
Despite not yet owning Bitcoin, Laffont projects its market cap could more than double to over $5 trillion by 2030, putting it in the same league as tech giants.
As reported, Shunyet Jan, Head of Derivatives at Bybit, has projected that Bitcoin could reach $125,000 by the end of Q2 if current trends persist.
Likewise, crypto analyst Scott Melker has said he believes Bitcoin could surge to $250,000 by the end of 2025, driven by institutional demand and a maturing market structure.
Credit: Source link
