Bitcoin Hashrate Enters First Bear Market as AI Pulls Miners Away

Bitcoin’s network hashrate has begun a sustained decline, marking what Twenty One Capital’s CEO Rapha Zagury describes as the first “bear market in hash rate” in the cryptocurrency’s history.

Hashrate Decline After Record Peak

The hashrate peaked near 1.3 zettahashes per second (ZH/s) late last year and has since entered a gradual downward trend. Zagury noted that this period represents the longest stretch the network has remained below a previous record without recovering.

Difference From Past Downturns

Unlike the 2021 collapse triggered by China’s mining crackdown, which saw equipment relocate and later return, the current decline is driven by a new factor: competition for power and infrastructure from artificial intelligence (AI) and high‑performance computing (HPC) operations.

AI and HPC Attract Mining Infrastructure

Data‑center assets originally built for Bitcoin mining—such as power supply, land, and grid connections—are increasingly valuable to AI and HPC firms. This creates an alternative use for mining facilities and influences miners’ strategic decisions.

Industry Moves Toward AI Contracts

• Keel Infrastructure has shut down all U.S. Bitcoin mining operations to repurpose sites for AI and HPC workloads, retaining about $819 million in liquidity for the transition.
• Bitdeer signed a 16‑year AI infrastructure agreement for 121 MW in Norway, valued at roughly $4.7 billion, with potential extension to $8 billion.
• Hut 8 secured a 15‑year, 352 MW AI lease in Texas worth $9.8 billion, expanding its AI portfolio to 949 MW.

Implications for Remaining Miners

Miners that continue to focus exclusively on Bitcoin could capture a larger share of block rewards as competing hash power shifts to AI workloads. This creates a paradox where AI draws resources away from Bitcoin while potentially improving profitability for those who stay.

Outlook

Zagury warned that few large public miners appear committed to scaling Bitcoin mining in the face of these AI-driven incentives. The evolving landscape suggests a re‑evaluation of mining economics and infrastructure allocation in the coming years.