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Bitcoin [BTC] ‘Eigenvalue’ suggests that it is more efficient than gold


According to a recent report by JPMorgan, the intrinsic value of Bitcoin can be defined using the concept of production costs. The cost of production at Bitcoin is the cost of mining.


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When this analogy is used for gold, the cost of producing gold is in excess of $ 1000 per ounce. Since mining is big business according to the laws of economy, it has to come into equilibrium as a zero-sum game. This means that the cost of production must be equal to value for the industry’s average profitability to be zero.

The demand for gold is mainly due to the jewelry industry and in small quantities in the tech industry. The other demand for Gold is as a reserve currency. Federal Reserves and Trust agencies around the world back up large amounts of gold and use it to control inflation and act as a hedge against currency fluctuations.

The intrinsic value of Bitcoin

Additionally, the average mining cost per bitcoin at current rates is around $ 4,200. This also explains why Bitcoin has been trading at this level for almost two months.

Bitcoin intrinsic value versus goldThe intrinsic value of Bitcoin versus the market price

Bitcoin is a growing industry, so price growth due to positive speculation would either force miners to sell their bitcoins for higher profit or buy more miners. Due to the high profitability, newcomers to the mining business are also expected, which will drive up miners’ costs.


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The Bitcoin market is very competitive in terms of price. In the near future, this will extend to mining as well, while the existing miners can benefit from it due to the economies of scale. Since In a free market structure, the production costs must be equal to the turnover for equilibrium. Therefore, The total average cost of mining will ultimately be the market price.

Mining economyEconomics of Marginal Costs and Income

JPMorgan’s intrinsic value argument suggests that it is speculation Bubble Bitcoin’s cost beyond its economic stability. Still, the efficiency and innovation of bitcoin mining could disrupt the large and expensive gold business of gold if it continues to be accepted as “digital gold”.

Do you think a sell-off is the only way to avoid a bubble, or are we headed for adoption? Please share your views with us.

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