Bitcoin’s latest pullback has pushed its market price beneath several energy-based valuation models, widening the gap between what miners spend to produce new coins and what the market is currently willing to pay.
These models, which draw on electricity prices, hardware performance data and miner behavior, are often used by analysts who prefer cost-anchored estimates to sentiment-driven forecasts.
Energy-driven valuations attempt to answer a simple question: How much does it cost, in real economic terms, to create a new bitcoin?
Energy models signal stress in mining economics
By tracking shifts in electricity costs and mining hardware efficiency, the models outline a theoretical “fair value” range. When spot prices fall below these estimates, it often reflects pressure on miners operating at thinner margins.
As profitability contracts, older or less efficient rigs tend to shut down, reducing total network energy use. When enough miners drop off, Bitcoin’s protocol responds. Every 2,016 blocks, difficulty adjusts to keep block times close to ten minutes. A drop in participation usually leads to a downward adjustment, trimming the energy needed for each block and lowering the marginal cost of production. Higher participation pushes the difficulty upward, raising the cost per coin.
This feedback loop has been central to Bitcoin's design since the network launched, and long-term charts show that market prices and production costs eventually meet again after large divergences.
BREAKING: #Bitcoin Is 31% Undervalued. Nasdaq Correlations Points to a $156K Fair Value. Price Manipulation by big actors at its finest. pic.twitter.com/nAhu5Vm0D7
— Carl ₿ MENGER ⚡️🇸🇻 (@CarlBMenger) October 22, 2025
MVRV Z-Score drops to levels linked with past accumulation phases
Alongside the energy-cost disconnect, the MVRV Z-Score, an on-chain metric that compares market value to realized value, is sitting near a 14-month low. Research groups that track long-term cycle behavior often view these readings as signals that investors with a longer horizon are gradually accumulating positions, though such periods can last for weeks before the market establishes a more decisive direction.
Ongoing weakness
Bitcoin’s dominance has eased in recent weeks, and several momentum gauges, including the Stochastic RSI, have tilted lower. Price action has hovered near support after breaking beneath a recent head-and-shoulders formation. Traders watching these levels note that the coming weeks may determine whether buyers attempt to stabilize the chart or whether the market drifts toward deeper targets outlined earlier in the downturn.
Mining difficulty continues to adjust with each cycle, reflecting the way miners respond to shifting economics. Rising energy costs throughout the year have compounded the strain. As electricity prices have climbed while Bitcoin has retraced, the spread between production-cost estimates and spot prices has widened.
Broader picture
To understand why Bitcoin’s price diverging from production-cost models feels more significant now, consider broader patterns in crypto mining revealed by recent data.
Global mining energy consumption reached 168.3 TWh by mid-2025, reflecting how power-intensive the network remains.
Interestingly, while consumption is high, renewables are playing a bigger role: as much as 62% of the mining sector’s power now comes from renewable sources, driven by both cleaner technologies and economic pressures to cut costs. Efficiencies in hardware are improving too, for example, Bitfarms reportedly reached 22.5 W/TH as of April 2025, a strong gain year over year.
On the market side, estimates say that the crypto mining industry is valued at $2.75 billion in 2025, and it’s projected to grow at a compound annual rate of 13.2% through 2035. This scale suggests that mining operations are not only widespread but becoming more industrialized and capital-intensive.
These trends help explain the growing wedge between Bitcoin’s market price and its energy-based valuation. As miners face rising costs. even with greener energy the pressure to remain profitable increases. That tension could heighten the relevance of those energy-driven models: when miners shut off or scale back, difficulty may fall, and the theoretical production cost implied by models could move closer to market prices.
Matvii Diadkov
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