Key Takeaways:Bitcoin is trading 31% below its energy-based fair value, per Capriole’s Energy Value model.Current estimated fair value is $167,800 vs BTC's spot price of ~$116,600.Bitcoin is now more undervalued than it was at $10K in September 2020.Record hashrates signal strong miner confidence and network fundamentals.Hash Ribbons metric flashed a bullish “buy signal” in late July.Bitcoin may be significantly undervalued compared to its underlying network fundamentals, according to Capriole Investments' Energy Value model — a pricing metric that ties Bitcoin’s “fair value” to miner energy expenditure.Charles Edwards, founder of Capriole Investments and creator of the Energy Value metric, stated this week that Bitcoin should currently be trading around $167,800, representing a 31% discount from the current spot price of approximately $116,677. The model suggests that the market is failing to price in the true cost and value of securing the Bitcoin network at all-time high hash rates.“Hash Rates are flying and Bitcoin Energy Value just hit $145K,” Edwards posted on X. “That puts price at a 31% discount to value.”Capriole’s Energy Value model, launched in 2019, is built on a formula that considers energy input, Bitcoin’s supply growth rate, and a fiat-denominated energy cost constant. The premise: if miners are contributing record energy to secure the network, the corresponding BTC price should reflect that effort.Bitcoin More Undervalued Than in 2020Remarkably, Edwards noted that Bitcoin is currently more undervalued relative to its energy value than it was at $10,000 in September 2020, just before the last major bull market erupted.This historical comparison may indicate that current BTC levels present a compelling long-term entry point for investors focused on network fundamentals rather than speculative cycles.Miner Confidence Rising With Hashrate at Record HighSupporting this valuation argument is Bitcoin’s surging hashrate, which hit a new all-time high of 1.031 zettahashes per second (ZH/s) on August 4, according to data from Glassnode. Rising hashrate generally reflects miner confidence, as more computational power is invested into securing the network — a bullish signal for long-term price direction.The Hash Ribbons indicator, which measures miner capitulation and recovery cycles, also flashed a buy signal in late July, reinforcing the case for continued strength in network fundamentals.Price vs. Energy: Time Is Running Out?Still, the Energy Value model also comes with a caution: when Bitcoin price rises too rapidly without a corresponding increase in energy input, the market has historically reverted back to its energy-based valuation.“Consistent energy input represents a balance between supply and demand,” Capriole notes. “When speculation causes skyrocketing prices without increased energy input, price has historically collapsed back to Energy Value.”With some analysts predicting the current Bitcoin bull cycle could peak within the next few months, the window to reach the $167K fair value estimate may be limited — unless further institutional flows, ETF momentum, or macro tailwinds accelerate price appreciation in line with network expansion.
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