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Bitcoin (BTC) Hits $81,000 in Energy Value, What It Means

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Mon, 11/03/2024 - 15:06
Bitcoin (BTC) Hits $81,000 in Energy Value, What It Means
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Bitcoin has achieved a significant milestone, reaching a staggering $81,000 in energy value — the intrinsic value of Bitcoin, as priced by raw joules of electricity into the mining network only.

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Charles Edwards, the founder of Capriole Fund, tweeted this milestone shortly after Bitcoin reached a new ATH, surpassing $72,000.

Bitcoin's energy value puts Bitcoin's fair value at $81,000, which is 14% higher than the current trading price, and it does have implications. The power required to fuel Bitcoin mining is determined by two factors: the hash rate to solve the SHA-256 algorithm and the energy efficiency of the mining hardware itself.

The fair value of Bitcoin can be represented as a function of the joules of energy spent to produce it and is a function of energy input, supply growth rate and a constant representing the fiat dollar value of energy.

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Sharp decreases in energy input often signify good times to exit the market, and strong energy input growth has often represented great times to buy.

Bitcoin, the world's largest cryptocurrency by market value, reached $71,000 for the first time, bringing this year's gain to about 70% thanks to enormous inflows into U.S. exchange-traded funds. At the time of writing, BTC had risen 3.12% in the previous 24 hours to $71,835 after reaching a new ATH of $72,422.

Bitcoin miners draw energy at record pace

As reported by Bloomberg, Bitcoin miners are drawing energy at an unprecedented rate, signaling a return to survival mode.

The surge in activity is sparked by a runup in the Bitcoin price, driven by several factors, such as the launch of spot Bitcoin exchange-traded funds (ETFs) and the impending quadrennial event known as the halving, scheduled for April.

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Bloomberg cited data compiled by TheMinerMag based on public filings, noting that since February 2023, 13 of the top mining companies have collectively placed orders for over $1 billion worth of specialized computers.

CleanSpark and Riot platforms have each spent significant sums, investing up to $473 million and $415 million, respectively, toward acquiring these rigs.

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