Bitcoin Yardstick


The Bitcoin Yardstick is a metric for Bitcoin that attempts to measure the P/E ratio, which typically assesses the value of a company's profits to its earnings to understand how valuable a company's stock is. For Bitcoin, that is the perceived value of the network over the value of energy used to maintain it.

There are three notable conditions:

Cheap: Yardstick < -1σ under the mean

Risky: Yardstick > +2σ above the Mean

Expensive: Yardstick > 3σ above the mean

Use Case

The Bitcoin Yardstick can help spot price disparity for long-term investment strategies and correlate the price changes with historical events (i.e., expensive Bitcoin during bull markets, Bitcoin becomes cheap during bear markets, Bitcoin became cheapest when FTX filed bankruptcy).


Bitcoin Yardstick = Market cap / Hashrate, normalized by a 2-year rolling Z-score