Even at its current market cap of $1.3 trillion, Bitcoin may be significantly undervalued.

Investing in cryptocurrencies is often seen as a high-risk, highly speculative endeavor. Popular cryptocurrencies like Bitcoin (BTC -2.23%) achieve astronomical valuations primarily because of investor perceptions of their massive future growth potential. This makes them more comparable to growth stocks than value stocks.

But what if you think outside the box? According to Bill Miller IV, chief investment officer of Miller Value Partners, Bitcoin can be analyzed as a value stock. Based on the intrinsic value Miller sees in Bitcoin, he believes it could be worth many times more than its current market value of $1.3 trillion. Is he right?

#Bitcoin for Value Investors?

There's a lot to consider here. Traditional fundamentals to value Bitcoin don't exist, so there are no benchmarks or metrics, like price-to-earnings (P/E) ratios, for comparison. Bitcoin hardly seems like an undervalued investment with its $65,000 price tag, trading near an all-time high. It appears more like a growth stock than a value stock.

However, Miller has a different perspective. In a recent research note, he explained why he continues to buy Bitcoin, seeing it as a value investment that is significantly undervalued relative to its future potential.

According to Miller, Bitcoin is a superior monetary technology. Its algorithm carefully controls the rate of new Bitcoin creation and its total lifetime supply, making it resistant to inflation. Additionally, its decentralized nature ensures no monetary authority or government can control it. The peer-to-peer aspect of Bitcoin's technology also means lower transaction costs compared to systems requiring financial intermediaries.

Miller is not new to advocating for Bitcoin. Since 2015, he and his father Bill Miller, known for beating the S&P 500 for 15 straight years, have argued for Bitcoin as a value investment. Back then, Bitcoin's market cap was just $3.4 billion, and they acknowledged a 97.25% chance of total failure. However, they also noted that if Bitcoin succeeded, it could be worth significantly more. Bitcoin, now worth over $1 trillion, has proven not to be a failure.

# "It's Still Early"

For Bitcoin to increase by another $1 trillion or more, several things need to happen. Bill Miller IV suggests that Bitcoin will need to be used more for payments. Currently, most people hold Bitcoin, but it was designed to facilitate peer-to-peer payments. Presently, Bitcoin accounts for less than 1% of the world's addressable market for capital.

Bitcoin also needs to establish itself as an alternative to gold. Investors typically turn to gold for a hedge against inflation or geopolitical uncertainty, but Bitcoin's share of the store-of-value market is growing. In 2022, Goldman Sachs suggested that Bitcoin might eventually account for 50% of this market.

Miller believes "it's still early." Understanding Bitcoin's intrinsic value requires rethinking what money, capital, and the role of governments are. Investing in Bitcoin requires a leap of faith and a complete shift in mindset, which takes time.

# How Much is Bitcoin Really Worth?

According to Miller, the best monetary technology usually wins, and Bitcoin is an impressive technological breakthrough. Just as plastic money replaced paper money, digital money might replace analog money. If that happens, Bitcoin could easily double, triple, or even quadruple in value. Miller did not specify a target for Bitcoin, only suggesting that it would be "many multiples" of its current value.

While I agree with Miller that Bitcoin is undervalued, I'm not convinced it's a value investment. Investing in cryptocurrencies involves tremendous risk, and much of Bitcoin's growth might take years, if not decades, to fully materialize. To me, that still sounds like a growth investment. Regardless of the label, though, I'm still backing up the truck and loading up on Bitcoin.