Bitcoin Hashrate Enters First Bear Market as AI Pulls Miners Away

Bitcoin’s network is no longer only competing against other miners; it is now competing with the artificial intelligence boom. Twenty One Capital CEO Rapha Zagury told the Bitcoin Asia 2026 conference in Hong Kong that Bitcoin is living through the first sustained “bear market in hash rate” in its history. He described a slow slide from record computational power that has no precedent in the way miners allocate machines, energy and data-center capacity. A Slow Descent from the Record 1.3 ZH/s Peak The Bitcoin hashrate is the total raw computing power used to secure the network’s proof-of-work system. It directly tracks how hard miners are competing to create new bitcoin and validate transactions. When hashrate rises, thousands of mining machines are fighting for a fixed number of block rewards; when it falls, smaller or weaker operators tend to leave the race and the remaining miners can capture more bitcoin per machine. Bitcoin’s hashrate approached 1.3 zettahashes per second (ZH/s) late last year before beginning a gradual decline. According to Zagury, the current stretch is the longest Bitcoin has ever spent below a hashrate record without recovering. Hashrate condition / historical marker What happened Downstream effect on miners Record high approached late last year Hashrate neared 1.3 zettahashes per second before grinding lower Mining competition had reached extreme levels before the trend flipped Current record gap Longest known period below the previous hashrate peak Surviving operators can win a larger share of newly issued bitcoin 2021 China crypto mining ban Machines were displaced from China and moved to other countries The sharp hashrate drop reversed once hardware found new homes AI / high-performance computing buildout Data-center power, land and grid access became prized by AI firms Bitcoin mining sites gained alternative use cases beyond block production The drop in hashrate does not mean Bitcoin’s underlying network is weak. Instead, it signals that some miners have stopped hashing, switched off equipment, or chosen to redirect their infrastructure to other computing workloads. The First “Bear Market in Hash Rate” in Bitcoin History Zagury delivered his warning on Aug. 28 during a keynote at Bitcoin Asia 2026 in Hong Kong. He used the conference stage to define the moment in unusually direct terms. “We’re living, I think, through the first bear market in hash rate that we’ve ever seen in Bitcoin history,” Zagury said during his Aug. 28 keynote. Zagury was careful to separate this cycle from the 2021 hashrate collapse caused by China’s crackdown on cryptocurrency mining. That shock left many machines unplugged, but most hardware was eventually shipped to new jurisdictions and switched back on. Hashrate recovered for reasons that no longer apply in the same way, he argued. “What we’re seeing now, it’s very different,” he said. “We hit close to 1.3 zettahashes late last year, and it’s been gradually coming down.” The difference matters because the current drawdown is not primarily a relocation event. It is an economic shift driven by new demand for the same power and physical infrastructure that Bitcoin miners use. Artificial Intelligence Enters the Race for Mining Infrastructure Data centers built for Bitcoin mining are not ordinary server warehouses. They tend to include firm access to large amounts of electricity, developed land, substation capacity and high-speed connectivity. Those same assets are now critical to artificial intelligence and high-performance computing companies racing to deploy massive compute capacity. Zagury said that overlap gives Bitcoin miners an option that did not exist in previous market cycles. “Data centers built for bitcoin can offer access to power, land and grid connections that AI and high-performance computing companies increasingly value,” Zagury said. “That gives miners an alternative to dedicating their entire infrastructure to bitcoin.” Zagury added that this optionality is often overlooked when investors evaluate mining companies. In his telling, a mining firm’s real estate, energy contracts and grid interconnection rights may now carry strategic value beyond their ability to produce bitcoin. A Dual-use Future for Bitcoin Mining Sites The structural conflict between Bitcoin mining and AI workloads is not just about converting an existing building. It is about whether new capital goes toward inserting more ASIC mining units into a facility or toward reconfiguring that facility to host general-purpose AI hardware. Bitcoin miners have an incentive to maximize the value of their power supply. In some cases, that means using the electricity to mine bitcoin. In others, especially when bitcoin-only profit margins are compressed, the same location can be marketed to an AI tenant or high-performance computing operator. That dynamic is now a central part of the hashrate bear market, because infrastructure withdrawn from Bitcoin does not automatically have to return. Zagury’s remarks frame the current hashrate downturn as a structural shift rather than a simple speed bump for the Bitcoin network. As artificial intelligence grows hungrier for electricity and land, the industries that had historically been separate are beginning to compete for the same physical resources. Bitcoin miners, long accustomed to fighting each other for the next block, are now feeling pressure from a very different type of competitor. Does a Hashrate Bear Market Mean Bitcoin Is Less Secure? Lower hashrate generally reduces the total amount of proof-of-work computing power protecting the network, which can alter the economic cost of mounting an attack. However, Bitcoin’s difficulty adjustment is designed to make block production easier when hashrate falls, ensuring the network continues operating while miners become more efficient. Why Is the Current Decline Different from the 2021 China Mining Ban? In 2021, the hashrate crash was caused by Chinese authorities forcing miners to shut down or move abroad. Most machines eventually found new power sources and came back online. Zagury says the current drop is different because it is gradual and because AI and high-performance computing now compete to buy or lease the same mining infrastructure. How Does Artificial Intelligence Pull Bitcoin Miners Away? AI data-center developers need reliable power, land and grid access, all of which large Bitcoin mining sites already possess. That makes mining facilities attractive acquisition targets or colocation partners for AI companies. Miners therefore have a growing financial alternative to keeping every machine dedicated to Bitcoin hashrate. What Is Twenty One Capital and What Does Its Ceo Do? Twenty One Capital is a Tether-backed bitcoin treasury company led by CEO Rapha Zagury. The firm focuses on holding bitcoin as part of corporate treasury strategy rather than operating industrial mining farms. Is Rapha Zagury Saying Bitcoin Hashrate Has Hit Its Final Peak? No. Zagury did not declare Bitcoin’s hashrate permanently capped. He said the network is in its first sustained hashrate bear market, with Bitcoin remaining below its record for the longest stretch ever seen, while AI infrastructure competition prevents the usual automatic recovery pattern.