Thomas Daniels
Bitcoin remains significantly undervalued when compared to its energy-based “fair value,” according to new analysis from Capriole Investments.
Bitcoin’s hash rate is hitting record highs, yet its market price still trails far behind what energy metrics indicate it should be worth. Charles Edwards, founder of Capriole Investments, estimates that the cryptocurrency’s fair value currently stands 45% above its market price of roughly $116,715.
Energy Value Model Indicates Bullish Potential
The Bitcoin Energy Value metric, introduced by Capriole in 2019, calculates fair value as a function of:
- Energy input from miners
- Bitcoin’s supply growth rate
- A constant representing the fiat value of energy
According to Edwards, the model shows Bitcoin’s fair price peaking at $167,800, with the simple moving average currently near $145,000. This suggests BTC is trading at a deeper discount today than in September 2020, when it last traded at $10,000 before a major rally.
Hash Rate Strengthens Network Fundamentals
Latest data from Glassnode indicates Bitcoin’s hash rate reached 1.031 zettahashes per second (ZH/s) on August 4, marking a fresh all-time high. Elevated hash rates signal robust miner participation and network security—both key drivers in the Energy Value framework.
“Hash Rates are flying and Bitcoin Energy Value just hit $145K,” Edwards noted, underscoring the growing divergence between fundamentals and price.
Price Lagging Behind Mean Reversion Trends
Market analysts suggest that the current Bitcoin bull cycle may only have months left. If miner energy input remains constant, BTC prices could converge toward the Energy Value figure. However, a drop in energy input could pull the fair value lower.
Capriole emphasizes that long-term BTC price growth tends to align with sustained increases in energy input, supported by higher hash power and improved mining efficiency. Conversely, speculative rallies without matching energy growth often end in sharp price corrections back toward the Energy Value benchmark.
Meanwhile, the Hash Ribbons indicator—a tool tracking miner capitulation and recovery—issued a fresh buy signal in late July, further supporting the bullish case.
