By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is that Bitcoin's price is not primarily driven by mining costs, with ETF flows, macro liquidity, and regulatory risk being more influential over longer horizons. The risk of a prolonged bearish regime and potential miner liquidations are key concerns.
Risk: Potential miner liquidations and a prolonged bearish regime
Opportunity: Long-term DCA may still suit holders
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
On June 5, Bitcoin (CRYPTO: BTC) slipped below the psychologically important $60,000 level for the first time since 2024, and it's priced near $61,800 on June 10. After its anemic price action over the last few months, the coin could be undervalued by at least one important metric by about 50%, suggesting those who buy it now could reap the benefits down the line.
So, should you buy Bitcoin right now? Let's take a look at the argument for it being undervalued.
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Miners produce Bitcoin.
Those miners own large banks of mining rigs, which require capital to purchase, operate, and maintain. Their operating costs are closely tied to electricity prices, as their rigs consume a lot of energy to perform the computations required to mine the coin. When everything works as intended, the capital expenditures and operating costs incurred by miners get recouped by the Bitcoin they produce, which they can sell to the market whenever they choose.
The cost to produce a new Bitcoin varies based on factors such as overhead expenses, hardware costs, average expected electricity costs, and the network's mining difficulty. A few different estimates placed the average cost to mine 1 BTC at approximately $87,000 as of February, so Bitcoin is changing hands for significantly less than it costs to create.
That tends to encourage miners to take their production offline, which, in turn, eventually constrains supply, pushing the coin's price back upward and attracting miners back to production.
But there's more than one school of thought on how to calculate the coin's valuation.
Using an alternative (but still valid) approach that calculates the coin's value based on the amount of energy being consumed by the entire Bitcoin network to create one coin, Bitcoin's modeled fair value is somewhere around $118,000 today; this method is focused more on realized energy expenditures rather than predicted ones, and it doesn't consider the cost of capital expenditures or overhead. That means the asset could be priced at a discount of roughly 40% to 50%.
Energy value is just one lens to evaluate Bitcoin's valuation, and it isn't comprehensive. The coin is also highly affected by capital flows from Bitcoin exchange-traded funds (ETFs), liquidity, and macro shocks, and each of those factors is likely more influential for its price than any mining formula.
For someone planning to be a long-term holder, buying the coin at or below its production cost has rewarded patience before, but it tends to be a long process that unfolds over a few quarters. Therefore, the best move here is to dollar-cost average (DCA), buying a fixed amount of the coin on a schedule. If the coin dips more, you'll be buying it at an even deeper discount relative to its production costs.
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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Bitcoin's current price relative to production-cost and energy-expenditure-based fair value creates an asymmetric upside if demand holds and mining supply tightens, but this hinges on stable macro flows and manageable regulatory risk."
The article argues BTC could be 40-50% undervalued based on energy-based fair value (~$118k) and ~90% above production-cost estimates (~$87k). If miners throttle output when prices dip, a supply-demand squeeze could re-rate price higher. But mining costs are highly sensitive to electricity, hardware, and difficulty; miners can switch to cheaper grids, upgrade efficiency, or curtail output gradually rather than in lockstep. Demand drivers (ETFs, institutions, macro liquidity) and regulatory risk are likely more decisive than mining costs over a multi-quarter horizon. The piece omits scenarios where price remains range-bound or declines further despite reduced mining activity, and underweights leverage, derivative risks, and policy shocks.
Even if miners cut output, prices may not rebound quickly because hedging, debt, and access to capital can keep selling pressure persistent; energy-based valuations can misprice BTC if demand collapses or regulatory risk surges.
"Bitcoin's price is governed by market liquidity and demand, not the sunk costs of mining infrastructure."
The article relies on the 'cost of production' fallacy, suggesting that because it costs miners ~$87,000 to produce a Bitcoin, the market price must eventually converge there. This is flawed; Bitcoin’s price is determined by marginal demand and liquidity, not a cost-plus floor. Miners are price-takers, not price-setters. If mining becomes unprofitable, the network difficulty adjusts downward, reducing energy consumption and lowering the cost of production for remaining miners. This creates a reflexive loop, not a guaranteed price floor. Investors should ignore the mining cost narrative and focus instead on the persistent net outflows from spot ETFs and the broader macro liquidity environment, which are currently the primary drivers of BTC price action.
If institutional adoption accelerates via ETF inflows, the supply-demand imbalance could force a price re-rating that validates the 'cost of production' theory as a self-fulfilling prophecy.
"The article's production-cost undervaluation thesis relies on miners behaving rationally and exiting en masse, but structural factors (locked power contracts, heterogeneous cost bases, ETF-driven price insensitivity) make this assumption fragile."
The article conflates two separate valuation frameworks without acknowledging their incompatibility. The $87k production-cost floor assumes miners are rational actors who exit unprofitably—but many are locked into long-term power contracts or have sunk capital they won't abandon. The $118k energy-value model ignores that energy *consumed* ≠ energy *paid for*; miners in Iceland or using flare gas operate at $20-30k/BTC. More critically, the article treats mining economics as *deterministic* of price, when ETF flows, macro sentiment, and regulatory risk are demonstrably more influential over 6-12 month horizons. The supply-shock thesis assumes a lag of 'a few quarters'—but if miners stay online at $61.8k because their marginal cost is $40k, no shock materializes.
If Bitcoin's true production cost is $87k and it trades at $61.8k, rational miners *should* be exiting—yet hash rate remains near all-time highs (June 2024 data), suggesting either the $87k figure is wrong, or miners have optionality (hedges, cheap power) the article ignores. A supply shock that never arrives is a thesis that fails.
"Production-cost models have not functioned as reliable price floors in prior cycles and are unlikely to drive the next move."
The article's core claim—that BTC at $61,800 sits 40-50% below $87k-$118k production costs and will trigger a supply shock—overstates a weak signal. ETF flows, macro liquidity, and miner balance sheets have repeatedly overridden cost-based models, allowing price to remain depressed for quarters even as rigs idled. Energy-value models ignore hardware depreciation cycles and the post-halving efficiency reset that lowers the effective floor each cycle. Long-term DCA may still suit holders, but the near-term re-rating thesis rests on assumptions that have failed in 2018 and 2022.
Miners have in fact curtailed output when spot prices fell below all-in sustaining costs, and historical rebounds eventually followed once hash rate contracted.
"The 'cost of production' floor only matters if miners can act on it; debt, hedges, and long-term contracts mute the price response, making a delayed, volatile supply adjustment more likely than a clean re-rating via ETF-driven demand."
You're dismissing 'cost of production' as a floor, but your reflexive loop assumes miners can freely abandon unprofitable units and uncapped exposure to energy costs. In practice, many miners are locked by long-term power contracts and financing; that creates a delayed supply response, which can drive volatility and amplify a shock when liquidity dries. ETF inflows alone won't resurrect prices unless demand actually materializes; the risk of a prolonged regime is under-flagged.
"The real risk is not a supply-side production shock, but a forced liquidation cascade of miner-held BTC due to high leverage and debt servicing requirements."
Gemini, your dismissal of the 'cost-plus floor' is correct, but you miss the credit risk. Mining isn't just about electricity; it's about debt. Many miners are highly leveraged, using BTC as collateral. If prices stay below production costs, we face not just a difficulty adjustment, but a forced liquidation cascade of miner-held BTC. That's the real transmission mechanism—not a supply-demand 'shock' from curtailed output, but a fire-sale of balance sheets to service debt.
"Miner debt doesn't create a supply shock that re-rates price higher—it creates forced selling that pressures price lower unless demand simultaneously surges."
ChatGPT flags leverage and debt correctly, but conflates two mechanisms. Miner liquidations *do* force BTC sales—but that's deflationary pressure on price, not inflationary. If miners are forced sellers at $61.8k, the supply shock thesis inverts: price falls further, not rises. The article's $87k-$118k re-rating only works if *demand* absorbs forced miner sales. Nobody's addressed whether ETF inflows can outpace a liquidation cascade. That's the real stress test.
"ETF mechanics may blunt liquidation-driven supply shocks more than the cascade narrative assumes."
Claude rightly flags that miner liquidations add immediate supply rather than creating scarcity, yet this underplays how ETF structures can front-run and absorb those flows via authorized participants before they hit open markets. The missing stress test is whether sustained net ETF outflows (already visible) would overwhelm that absorption if macro tightening coincides with any capitulation wave.
The panel consensus is that Bitcoin's price is not primarily driven by mining costs, with ETF flows, macro liquidity, and regulatory risk being more influential over longer horizons. The risk of a prolonged bearish regime and potential miner liquidations are key concerns.
Long-term DCA may still suit holders
Potential miner liquidations and a prolonged bearish regime