Intrinsic Value of Bitcoin At $81,000. What It Means For Crypto Stocks and ETFs

We have seen yet another remarkable milestone by Bitcoin, energy value soar to $81,000 (this marked the intrinsic value as measured by the raw joules of electricity consumed within the mining network).

This is announced by Charles Edwards, founder of Capriole Fund in Twitter after Bitcoin surpassed $72,000, hitting a new all-time high. At time of writing, Bitcoin stays above $72,000

Bitcoin Latest Energy Value Signals Market Discrepancy and Mining Dynamics

With the latest energy value of $81,000, Bitcoin fair value is currently 14% higher than its current trading price ($72,287). This does show some significant implications for the cryptocurrency market.

The energy required for Bitcoin mining hinges on two critical factors: the hash rate necessary to solve the SHA-256 algorithm and the energy efficiency of mining hardware.

Significance of the Hash Rate Surge

We are seeing Bitcoin hash rate moving in an upwards trend. This surge in hash rate carries profound implications for the network. Firstly, it enhances network security. A high hash rate means more computational resources are necessary to alter blockchain data, significantly reducing the odds of successful cyber attacks. Consequently, the Bitcoin ecosystem becomes increasingly fortified against potential threats.

Moreover, this rise in hash rate reflects the growing participation of miners, suggesting a buoyant and expanding network. Additionally, Bitcoin’s protocol autonomously adjusts the mining difficulty in response to hash rate changes, maintaining a consistent block discovery rate and the predictability of Bitcoin’s supply.

The increasing hash rate also demonstrates miners’ continued commitment, investing heavily in advanced mining equipment and energy. For investors, a robust hash rate is a beacon of a strong and reliable network, often translating into heightened confidence in Bitcoin’s long-term viability.

Bitcoin's Fair Value Linked to Energy Expenditure

The fair value of Bitcoin is intricately linked to the joules of energy expended in its production, determined by energy input, supply growth rate, and a constant representing the fiat dollar value of energy.

Fluctuations in energy input can serve as indicators for market exit or entry, with sharp decreases signaling opportune moments to exit and robust growth indicating favorable buying conditions.

Bitcoin miners are ramping up their energy consumption at an unprecedented rate, signaling a return to survival mode. The surge in mining activity is attributed to various factors, including the launch of spot Bitcoin exchange-traded funds (ETFs) and the upcoming quadrennial halving event scheduled for April.

Miners Ramping Up Capacity. Spot Bitcoin ETFs Benefit?

While we know that some miners have been ramping up their capacity before the halving and in the midst of rising hash rate, there will be more demand in Spot Bitcoin ETFs as well.

The overall volume for the Spot Bitcoin ETF have been rising since Bitcoin start to make the $69,000 high.

As seen in the volume for $iShares Bitcoin Trust(IBIT)$ and $Fidelity Wise Origin Bitcoin Fund(FBTC)$

And it is time to also look at $MicroStrategy(MSTR)$ , they have reported to have buy another 12,000 Bitcoin, and not forgetting the major miners, like $Marathon Digital Holdings Inc(MARA)$

Bitcoin trading platform like $Coinbase Global, Inc.(COIN)$ would also benefit from this new intrinsic value of $81,000.

Summary

I believe this Bitcoin rally could probably last until April when we see the halving event, so this might be a good time to take position in crypto stocks or spot bitcoin ETFs if you have not done so.

Appreciate if you could share your thoughts in the comment section whether you think Bitcoin rally would continue after halving?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.

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