How much energy, housing, land, business equity, or human labor time can one Bitcoin be exchanged for?

Written by: Dave Birnbaum, Forbes

Translated by: AididiaoJP, Foresight News

Bitcoin has entered the realm of trillion-dollar assets. However, the connotation of this "trillion" deserves close examination.

In today's society, a trillion-dollar scale of debt is no longer uncommon. However, this week the U.S. federal debt surpassed $40 trillion, which is still a sobering reminder. If we consider a cost of $1 per second, it would take about 1.27 million years to exhaust this amount.

Economist Peter C. Earle points out that we have entered "Trillionistan"—a number that once belonged solely to the realm of astronomy now frequently appears in financial headlines. Currently, there are at least a dozen publicly listed companies in the U.S. valued at over $1 trillion; plans for building artificial intelligence infrastructure often have investments already in the trillions before any land has been appropriated.

Bitcoin is also among them. As of the time of writing, about 21 million Bitcoins are in circulation, priced at approximately $77,355 each, with a total market capitalization close to $1.54 trillion. This number seems staggering. How can a digital asset carry such a high valuation?

The trillion-dollar market cap of Bitcoin is built on three main forces: the actual growth of its monetary network, market expectations regarding its future applications, and the depreciation of the U.S. dollar used for pricing.

The supply side of Bitcoin has a high degree of regulatory certainty—its issuance timeline is public and transparent, making it difficult to be swayed by political factors; however, its price is continuously affected by the attributes of fiat currency. Thus, understanding the value of Bitcoin requires us to ask a more fundamentally significant question than "how high can the price go": what kind of "trillion" is being priced by the market?

Trillion is common, but it refers to different things

In 1901, J.P. Morgan established U.S. Steel as the world's first company with a market capitalization exceeding $1 billion. At that time, this figure shocked various sectors and the company became a symbolic representation of industrial strength and financial concentration.

Over the past decade, startups valued at over $1 billion have been called "unicorns"; today, such companies are ubiquitous in the market, and perhaps they should be retitled "workhorses." High valuations are becoming increasingly common, partly due to improvements in productivity and efficiency, but the main reason lies in the continuous decline in the purchasing power of the dollar used to measure company value.

Earle has made a revealing distinction: the trillions created through entrepreneurship and discovery are vastly different from those generated by monetary expansion and debt accumulation. Most large economic numbers simultaneously contain dual components—a tech company may serve billions of users and create substantial profits, while simultaneously driven by abundant liquidity, investors buy into stocks, causing its valuation growth to far exceed fundamentals; governments can borrow trillions to build productive infrastructure (the legitimacy of which is questionable due to a lack of market signals to guide resource allocation), while also using debt to delay the release of financial risks.

The larger the number, the more important this distinction becomes. As the unit of measurement itself continues to shrink, breaking price records becomes increasingly easy. Over the past century, the U.S. money supply has expanded from billions to trillions. The same property, the same company, the same ounce of gold can command a higher dollar price even if its actual use has not increased at all. In other words, price carries not only the effective information of the asset's optimal use, but also mixes the impact of changes to the unit of measure itself. One of the core responsibilities of financial professionals is to clarify the distinction between the two through in-depth research and modeling.

Bitcoin introduces a unique variable to this issue. Its quantity is defined by a set of fixed protocol rules, while its value is typically expressed in currency that is influenced by policy and credit conditions. On one side of the ratio (supply), there is predictability; on the other side (demand), it fluctuates with interest rates, market liquidity, and political factors.

The actual meaning of Bitcoin's market capitalization

The market capitalization is calculated by multiplying the latest transaction price by the circulating supply. However, Bitcoin's current market cap of about $1.5 trillion does not imply that investors have deposited $1.3 trillion of existing capital into Bitcoin. The actual pricing is determined by the latest marginal buyers and sellers, and is assumed to apply to every unit in circulation.

As a result, a relatively small transaction can reprice a massive asset stock. Market cap reflects the value the market currently assigns to the entire supply, yet it is almost incapable of indicating the scale of capital required to create that valuation, nor can it assess its durability.

The price of Bitcoin can also easily evoke a misunderstanding known as "unit bias." People see the five-digit high price and may feel a sense of missing out, as if Bitcoin must be purchased in whole units like stocks. In fact, each Bitcoin can be divided into 100 million units, known as "satoshis." The protocol can fully display the total supply as 2.1 quadrillion smaller units without affecting the network's scarcity. A Bitcoin priced at $75,000 and a satoshi at $0.00075 reflect the same purchasing power in the dollar valuation system.

In contrast to unit prices, trillion-plus market caps carry informational value, as they describe the value attributed by the market to the entire network. However, this number too must be examined in a specific context. In 2024, when Bitcoin's market capitalization was around $1.3 trillion, I wrote that its financial infrastructure and institutional ownership were reshaping the public markets. Today, two years later, custody services, ETFs, corporate adoption, and sovereign interest continue to grow, while nominal valuations have largely returned to similar levels. Prices may hover in place while the asset itself has undergone profound changes.

The three components of Bitcoin's trillion-dollar valuation

The first component is monetary dilution. When governments increase the issuance of money and credit, scarce assets often become outlets for absorbing incremental liquidity. Stocks, real estate, art, gold, and Bitcoin all serve as reservoirs for individuals attempting to preserve purchasing power. Therefore, the rise in Bitcoin's price may reflect an increase in demand for the asset, a weakening of the dollar, or a combination of both.

The second component deserves particular attention—especially for observers who have yet to understand the foundational value of Bitcoin—namely, its network utility. Bitcoin can transfer value globally without the need for any banks or intermediaries; it provides a final settlement mechanism without an issuer; and it allows any participant to verify its supply. Miners expend energy to maintain an openly shared and publicly visible Bitcoin ledger, while individuals running "nodes" (small computer programs) are responsible for executing network rules. Bitcoin as a whole can be viewed as a financial service provider, despite not relying on any singular institution or intermediary. A monetary network creates value through liquidity, credibility, settlement capacity, and the willingness of a number of entities (including individuals and agents) to accept it as a means of payment.

The third component is the capitalization of future currency demand—critics may call it speculation, yet its essence is the operational logic of investing. Investors buy Bitcoin today based on expectations of future holdings by more individuals, companies, funds, and governments. In this sense, Bitcoin’s market cap is akin to the valuation of a growing network. It reflects demand for a scarce monetary commodity, but does not confer any claim to future company profits. This makes it challenging for traditional investors to understand, as they typically believe that asset prices can be estimated by discounting future cash flows to the present. This is precisely where Bitcoin's characteristic as an emerging asset class lies—its nature is closer to that of currency and commodities rather than stocks.

This also explains why Bitcoin is often regarded as "digital gold." The value of gold primarily derives from a long-accumulated consensus—that it can preserve wealth across time and political systems. Bitcoin is vying for part of this currency premium, but compared to gold, its advantages lie in being more easily divisible, verifiable, transferrable more quickly, and at a lower cost. Gold still enjoys deeper institutional trust and a larger foundation of sovereign buyers, which also helps explain why gold may rise while Bitcoin stagnates. Even if the long-term currency argument remains valid, different marginal buyers can produce entirely different price movements.

Energy transformed into a currency network

Bitcoin also belongs to the larger narrative about energy within the "Trillionistan" framework. Bitcoin miners convert electricity and specialized computing into network security in exchange for newly issued bitcoins and transaction fees. Since Bitcoin mining operations can run near remote power generation facilities and reduce consumption when electricity is needed elsewhere, they can monetize stranded, intermittent, or hard-to-transport energy.

This process has similarities with the current construction of AI infrastructure. In fact, given that the regulatory environment regarding new data centers is increasingly stringent, many data centers are located within or near Bitcoin mining operations. Just as Bitcoin transforms electricity into security, data centers transform electricity into intelligence. The upcoming robotic revolution will transform electricity into physical labor. Each type of system opens new economic pathways for energy, a point I explored in my article "Bitcoin, AI, and the Four Forces Shaping the New Economy." For decades, electricity has been the cornerstone of economic value, and the AI-driven economy finally makes it more perceivable. Bitcoin is also based on the ability to produce and consume energy and thus aligns highly with this new era.

The road to "Ten Trillionistan"

A Bitcoin valued at the trillion-dollar level sounds quite absurd today. Assuming a circulating supply of 20 million coins, it would mean each Bitcoin is priced at around $50 million. However, this number alone hardly indicates what form the world must evolve into to support this pricing.

If the dollar maintains its current purchasing power, a ten trillion valuation would imply Bitcoin has absorbed a fairly considerable share of global capital (this scenario is not unimaginable). On the other hand, severe inflation could also produce the same nominal milestone, while Bitcoin's actual purchasing power would be far below what supporters envision. In 2013, Japan's government debt exceeded 1,000 trillion yen, proving that a gigantic number, if devoid of a monetary context, reveals very limited information.

A better measure should focus on: how much energy, housing, land, business equity, or human labor time one Bitcoin can be exchanged for; and should also examine the network’s share in global savings, settlement volume, liquidity, and ownership.

Bitcoin's current trillion-dollar market cap partly derives from productive achievements, partly reflects a bet on future applications, and partly results from fluctuations in the currency itself. Unlike other assets, the Bitcoin protocol makes these components easier to separate due to its own transparent issuance schedule. If Bitcoin's market cap reaches $10 trillion or $100 trillion, the core question remains unchanged: how much has the network grown, and how much has the measuring standard shrunk?