Bitcoin’s Hidden Value: Why the Cryptocurrency Could Be Worth Up to $167,800
Imagine if you could measure the true value of Bitcoin, beyond its current market price. According to Charles Edwards, founder of Capriole Investments, the cryptocurrency’s fair value could be as high as $167,800, based on a proprietary metric called the Energy Value. This calculation takes into account the energy input required to mine Bitcoin, as well as the scale of mining activity. And right now, the current price of around $116,000 is roughly 45% below where it should be, according to Edwards.
How the Energy Value Metric Works
The Energy Value metric, developed in 2019, estimates Bitcoin’s fair value by combining energy input, supply growth rate, and a constant representing the fiat dollar value of energy. In essence, it 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. But with record hashrates – the computing power securing the network – pointing to a strong valuation, it’s clear that miners are committed to keeping the network running.
Hash Rates and Energy Value: A Key Indicator
Recently, Bitcoin’s hashrate hit an all-time high of 1.031 zettahashes per second, according to Glassnode data. This surge in hash rates has led to a corresponding increase in Energy Value, which has climbed as high as $167,800 in recent weeks. As Edwards noted, this puts the market price at a 31% discount to value – a deeper discount than in September 2020, when Bitcoin traded at $10,000.
What This Means for Bitcoin’s Price
So, what does this mean for Bitcoin’s price? According to Edwards, sustained price growth relies on consistent energy input. If miners reduce their energy commitment, the fair value of Bitcoin could decline. However, with higher market prices incentivizing miners to increase hash power and improve efficiency, the outlook is bullish. In fact, 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 and Institutional Demand: A Potential Driver of Growth
But that’s not all – pension funds and institutional demand could also drive Bitcoin’s price higher. Standard Chartered has projected that Bitcoin could reach $200,000 by the end of 2025, with pension funds expected to be key drivers. And with billionaire investors like Philippe Laffont, founder of Coatue Management, including Bitcoin in their top investment opportunities, it’s clear that institutional interest is growing. As reported, some analysts have even predicted that Bitcoin could surge to $250,000 by the end of 2025, driven by institutional demand and a maturing market structure.
While it’s impossible to predict the future with certainty, one thing is clear: Bitcoin’s value is deeply tied to the energy input required to mine it, and the commitment of miners to keeping the network running. As the cryptocurrency continues to evolve and mature, it will be exciting to see how its price responds to changing market conditions and institutional demand.
