Implications of Quantum Computing on Bitcoin’s Market Valuation
The ongoing bear market for Bitcoin, the preeminent digital asset, presents a significant risk of exacerbation over the forthcoming year should it fail to adequately address the emergent threats posed by quantum computing. In a recent analytical report dated February 20, Charles Edwards, founder of Capriole, posited that Bitcoin’s market capitalization should be preemptively discounted due to quantum risk. He cautioned that this discount could intensify rapidly if the network does not advance towards implementing quantum-resistant protocols.
Edwards articulated a stark warning:
“Bitcoin will be worth half as much in little over a year if we do not progress an upgrade to quantum proof Bitcoin. Without progress, Bitcoin’s Quantum Discount Factor jumps to 75% in 2029.”
This projection indicates that Bitcoin’s price may plummet from its current valuation of approximately $68,000 to around $30,000 within the next year, should the network remain stagnant in addressing quantum vulnerabilities. Furthermore, Edwards forewarned of a potentially catastrophic scenario where Bitcoin’s value could diminish to zero following what he terms “Q-Day,” should the network fail to mitigate quantum computing threats.
Current Valuation and Potential Underestimation
Despite prevailing concerns regarding quantum risks, Edwards asserts that Bitcoin’s current market price is undervalued by roughly 30%, with a fair valuation estimated at around $120,000. When accounting for quantum risks, this fair value could adjust to approximately $96,000. He remarked:
“In other words if you are a long-term investor in Bitcoin, and optimistic we will solve on the quantum threat in the next 2-3 years, then Bitcoin in the $60,000s is an attractive long-term opportunity.”
This perspective underscores a critical insight: while an immediate quantum attack may not be imminent, market participants could begin to devalue Bitcoin preemptively based on anticipated challenges related to governance and the migration process. Edwards’ analysis illustrates how risk is translated into a valuation discount due to the inherently slow nature of Bitcoin upgrades necessitating extensive coordination among developers, network nodes, miners, exchanges, and wallet users.
The Transition from Theoretical Concern to Immediate Risk
Edwards posits that the discourse surrounding quantum risk has shifted from being merely speculative to becoming a pressing timeline issue. He identifies a threshold of approximately 2,300 logical qubits as sufficient to undermine Bitcoin’s existing cryptographic framework. According to his estimations—based on collated industry forecasts—a cryptographically relevant quantum event is anticipated by 2030 with increasing likelihood by 2031:
“Bitcoin Q-Day is likely to occur by 2030 (60% chance) and probable by 2031 (80% chance).”
His primary concern lies in Bitcoin’s capacity for timely adaptation. Edwards estimates that transitioning a majority of active users towards quantum-resistant wallets and code could require approximately two years—potentially extending from one to three years even under aggressive scenarios.
This discrepancy between the rapid advancement of quantum computing technologies and the slower pace of Bitcoin governance constitutes the bedrock of his “discount factor” argument. Notably, this perspective has garnered attention beyond niche cryptocurrency discussions; for instance, BlackRock’s recent amendments to its iShares Bitcoin Trust ETF prospectus explicitly warn that advancements in quantum computing might render Bitcoin’s cryptographic safeguards obsolete.
The implications of such warnings are profound: they recast quantum computing as a governance and coordination risk rather than merely a technological vulnerability. Consequently, even if technological advancements occur later than anticipated, uncertainty regarding readiness can exert downward pressure on market valuations.
Assessing the Stakes: Challenges and Considerations
Edwards delineates the quantum challenge facing Bitcoin into two principal components: first, the necessity of migrating active users to a quantum-resistant iteration of Bitcoin; second, addressing older or exposed coins that may remain vulnerable if quantum systems can successfully derive private keys from public keys.
He estimates that between 20% and 30% of the total Bitcoin supply is “public key exposed,” encompassing older output formats and dormant coins. This exposure poses a potential hazard whereby these coins could emerge as a significant source of forced supply in adverse scenarios. At current market prices, this exposure translates into an estimated value ranging from approximately $282 billion to $423 billion.
Furthermore, CoinShares’ February 2026 analysis quantifies the “long exposure” conundrum associated with this risk. They assert that exposure is predominantly concentrated within legacy Pay-to-Public-Key (P2PK) outputs—amounting to roughly 1.6 million BTC or about 8% of total supply—where public keys are openly visible. However, the portion capable of causing substantial market disruption in cases of rapid liquidation is notably smaller; CoinShares estimates only around 10,200 BTC reside in UTXOs large enough to be impactful in such scenarios.
A Path Forward: Proposals and Governance Challenges
In addressing the imminent threat posed by quantum computing, Edwards proposes an innovative “dead man’s switch” mechanism post-migration. Under this proposal, coins that do not transition to quantum-resistant outputs within a designated timeframe could face freezing or liquidation. While he argues that such measures might help preserve network value, he also recognizes that achieving consensus on this approach poses significant challenges; it fundamentally contradicts Bitcoin’s ethos encapsulated in “not your keys, not your coins.” Users who lose access and fail to migrate would consequently suffer disadvantages.
This potential forced liquidation could erode confidence in Bitcoin’s foundational principle as “hard money,” precipitating a deeper bear market. In response to these existential risks, the broader Bitcoin community is actively pursuing solutions; a draft proposal known as BIP 360 has emerged within the Bitcoin Improvement Proposals repository. This proposal introduces Pay-to-Merkle-Root (P2MR), a suggested soft fork output type aimed at mitigating certain long-term quantum risks while laying groundwork for future post-quantum signature integration.
Moreover, external standards bodies are advocating for institutional preparedness against these emergent threats. The National Institute of Standards and Technology (NIST) has urged organizations to commence migrations toward quantum-resistant cryptographic systems—a reflection of an overarching shift towards proactive rather than reactive strategies.
This evolving discourse signals a transition from speculative deliberation regarding “if” such threats will materialize towards concrete considerations surrounding “when” and “how” these changes must be implemented.
For investors in Bitcoin, this framing refines their inquiry beyond superficial headlines; it pivots focus towards whether sufficient visible progress can be demonstrated along an upgrade trajectory capable of mitigating quantum risks before they manifest as a more pronounced discount within an already precarious market landscape.
