Financial analysis based on the ‘Energy Value’ metric suggests Bitcoin is currently trading at a significant discount to its theoretical fair value derived from miner energy expenditure. The metric estimates Bitcoin’s fair value at approximately $167,800, indicating a potential 31% undervaluation compared to current market prices.
The Energy Value framework, developed by analytics firm Capriole in 2019, calculates a price for Bitcoin by converting the fiat dollar cost of the energy consumed by miners securing the network. This approach ties the asset’s value directly to the physical resources underpinning its operation.
Supporting this valuation model, Bitcoin’s network hash rate recently achieved a new all-time high of 1.031 zettahashes per second (ZH/s). This unprecedented level of computational power highlights the substantial energy commitment by miners and reinforces the foundation of the Energy Value calculation.
Market observers draw parallels between the current discount to the energy-based fair value and historic market opportunities. Notably, a similar valuation gap existed in September 2020 when Bitcoin traded around $10,000, preceding a major bull run. This historical context fuels bullish sentiment among some participants.
Further bolstering the positive outlook is the Hash Ribbons metric, which currently points to a recovery phase for miners and historically correlates with constructive price performance for Bitcoin. This technical indicator aligns with the energy-based analysis, suggesting potential for a future price increase.