Bitcoin’s hashrate is facing a historic shift as it enters its first-ever bear market, signaling a prolonged downturn in the network’s computational power. Rapha Zagury, CEO of Twenty One Capital, revealed this during the Bitcoin Asia 2026 conference in Hong Kong. Unlike the previous cycles, this decline is deeply intertwined with the growing influence of artificial intelligence (AI) and high-performance computing (HPC), which now compete fiercely for energy resources traditionally dedicated to mining. This change marks a new chapter in the market trend affecting blockchain infrastructures and the economics of cryptocurrency mining.
Backed by data, the hashrate peaked at an all-time high of 1.3 zettahash per second (ZH/s) at the end of 2025 but has since dropped by approximately 31%, hovering near 0.9 ZH/s in the months that followed. This sustained dip is unprecedented in Bitcoin’s history, reflecting a longer-than-ever period without surpassing previous power benchmarks. Unlike earlier fluctuations, this decline is not only about numbers but about the underlying shift in resource allocation driven by AI’s rising dominance. As mining operations reassess their strategies, the energy flexibility of mining equipment and the inelastic supply adjustments inscribed in Bitcoin’s protocol are becoming vital in maintaining network security and economic incentives for miners.
Bitcoin Hashrate Enters Uncharted Bear Market Territory Amid AI’s Growing Role
The Bitcoin hashrate bear market represents a unique period where the overall computational power securing the blockchain declines steadily over several months. Rapha Zagury from Twenty One Capital emphasized this as an unprecedented event, contrasting it with past cycles such as in 2021. The hashrate’s record high at 1.3 ZH/s was a pinnacle that mining activity has struggled to exceed since, remaining around 0.9 ZH/s, suggesting a 31% drop.
This sustained downturn is not just a statistical quirk; it indicates that miners are increasingly shifting resources away from Bitcoin mining, influenced substantially by AI-driven computing demands. Mining rigs, primarily ASICs, share infrastructure with AI and HPC equipment, leading many public mining companies to diversify or pivot entirely. This realignment highlights a broader economic competition between digital assets mining and AI technology for energy consumption and infrastructure.
The Unique Economic Nature of Bitcoin as a Digital Commodity
According to Zagury, Bitcoin functions like a distinctive form of commodity, more pure than traditional ones like oil or gold. The embedded difficulty adjustment mechanism in Bitcoin’s protocol ensures that block mining times remain constant at about 10 minutes, regardless of the overall hashrate. This characteristic renders supply inelastic: miners can power down without immediate impact on supply or price, as difficulty self-adjusts to network conditions.
This makes Bitcoin radically different from conventional commodities, where increased prices normally incentivize increased production, ultimately balancing prices over time. For mining, this embedded self-regulation means that even with reduced mining power, Bitcoin’s issuance remains steady, preserving network security and miner incentives. This unique economic feature safeguards Bitcoin as a resilient digital asset despite fluctuations in mining power.
AI and HPC Technologies Fuel Competition Impacting Bitcoin Mining Power
One of the pivotal reasons behind Bitcoin’s hashrate bear market is the competition with AI and HPC infrastructures for electricity and hardware capacity. Many large-scale miners listed on US markets have shifted focus or supplemented their operations with AI computing. For example, Core Scientific partnered with CoreWeave to allocate 500 megawatts (MW) to HPC applications, while others like IREN and TeraWulf have secured lucrative agreements with tech giants such as Microsoft, Google, and AWS to supply AI computation power.
This trend is rechanneling gigawatts of power traditionally used for cryptocurrency mining toward AI, a sector with rapidly expanding energy demands. Despite this, Zagury sees opportunity: with fewer miners competing, those dedicated to Bitcoin mining can expect a relatively increased share of the rewards per block – currently about 3.125 BTC valued at over 240,000 USD at present prices.
Mining’s Flexibility in Energy Use Becomes a Strategic Advantage
Beyond competition with AI, Bitcoin mining’s adaptability to energy supply fluctuations is gaining recognition. Unlike heavy industries such as steel production, which require stable and continuous power, mining operations can be turned on or off rapidly, making them exceptionally flexible consumers of electricity. Many mining facilities absorb excess electricity during off-peak hours, helping stabilize power grids while reducing energy waste.
This flexibility is fostering new partnerships between miners, governments, and energy companies eager to optimize their grids. The perception of Bitcoin mining has evolved significantly since earlier criticisms about its energy consumption, now being seen as a complementary force in energy management and sustainability, especially as clean energy sources become more prevalent.
