The Great Repricing

Michael Green AKA Professor Plum on X, has a fascinating post on the future of Bitcoin.

Please consider The Great Re-Pricing: When the "Digital Gold" Bill Came Due

In April 2025, I asked a simple question in my note, "What is Gold?":

"If the $1.7 trillion now sitting in bitcoin had flowed into bullion instead, what would the yellow metal trade at?"

My models suggested that bitcoin acted as a "shadow discount" on Gold, depressing its price by 30–50% by diverting monetary flows into a faster, digital horse. I argued that if those flows ever reversed—if the "Passive Bid" for bitcoin evaporated—Gold would violently re-rate to where it belonged.

Eight months later, we have our answer. In 2025, bitcoin and Gold flows became negatively correlated.

Now, this is not a STRONG relationship, and I'm not remotely going to suggest that the only source of gold flows is coming from bitcoin. But it IS happening. And as I noted last week, it's an indication of what I believe is the most significant asset rotation of the second half of the 2020s — not a "rotation" from Tech to Value, but a rotation from Energy Consumers to Energy Conservers/Producers.

The bitcoin "Store of Value" trade has fundamentally broken in two. Unlike gold, which is mined with energy, but then remains "gold" regardless of how much mining energy is expended, bitcoin requires continual energy expenditure to maintain the bitcoin network. The mining stops and bitcoin stops; the mining slows, and the bitcoin network's "safety" and performance degrade.

The "Jaws of Death" (bitcoin's insolvency)

To understand why Gold is soaring, you first have to understand why bitcoin is bleeding.

In the "Post-Capitalist" era of zero interest rates and surplus energy, we believed we could solve financial problems with code. We ignored the Second Law of Thermodynamics: entropy. Maintaining a digital ledger requires a constant injection of ordered energy.

This chart is the receipt for that entropy [Lead Chart]

I have noted this relationship in many discussions of bitcoin. It's important to remember what "bitcoin" actually is — the token issued to miners (accountants) for maintaining the network. If the price of bitcoin falls, miners receive less compensation for doing the work.