Is there a fundamental price for Bitcoin as digital gold?

As Bitcoin surpassed the $40,000 mark on January 9, 2021, people started to wonder whether Bitcoin is a bubble or a real asset. If Bitcoin is not a mirage but the digital gold, what would be its fundamental price?

Bitcoin prices based on gold inventories

Bitcoin has many similarities with gold. Based on that assumption, what can its price be? At the end of 2019, estimates of above-ground stocks of gold were 197,576 tons and below-ground reserves of 50,000 tons making total stocks of  247,575 tons. . At 22/01/2021 price of 1,853 per oz for gold, BTC would be priced at $770,455!  But it is highly unlikely that BTC completely replaces gold. At 22/01/2021 price of $33,005, BTC represents 4.3% of gold market capitalization. Its price would be $10,746 if BTC substitutes for all gold-backed ETF and $132,518 for all gold private holdings. The fact that BTC price is between the two may reflect that BTC is superior to ETF as a liquid decentralized store of value but inferior to gold holdings as a more established and physical store of value.

Bitcoin prices based on mining costs

Despite drawbacks underlined in a previous post, can we draw an intrinsic value based on cost of mining? Indeed, costs of mining depend on the difficulty that adjusts roughly every 2 weeks. With a difficulty of 19.4t, electricity cost of $0.084 and an AntMiner S9 ASIC mining hardware (14TH/s and 1,375 Watts), the cost of mining a bitcoin is $29,060. The ratio of ASIC (All-In Sustaining Cost of mining) to annual average prices of gold is between 131% in 2015 and 179% in 2020. The price of Bitcoin on 22/01/2021 was $33,006 equivalent to a premium of 14% over cost of mining. If we apply the premiums found for gold, BTC prices would be between $38,068 and $52,017 (resp. 31% and 79% premium). Average AISC and prices of gold

For you, what is the intrinsic value of Bitcoin?

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