Bitcoin's network hashrate has entered its first-ever bear market, according to Twenty One Capital CEO Rapha Zagury. Miners are redirecting power and infrastructure toward artificial intelligence and high-performance computing instead of expanding bitcoin mining capacity, and Zagury says the shift looks fundamentally different from the 2021 China mining crackdown.
Hashrate Sits Below Its Record for the Longest Stretch Yet
Bitcoin's hashrate is stuck in its longest decline without a new record, and the cause is competition from AI infrastructure rather than a mining crackdown. Zagury, whose firm is backed by Tether, told the Bitcoin Asia 2026 conference in Hong Kong on Aug. 28 that the network is going through its first bear market in hash rate.
Bitcoin's hashrate approached 1.3 zettahashes per second late last year before beginning a gradual decline, and Zagury said the current stretch marks the longest period the network has spent below that record without recovering. A lower hashrate means less competition among miners, so surviving operators can capture a larger share of bitcoin production.
Why This Differs From the 2021 China Ban
Zagury argued the current downturn looks fundamentally different from 2021, when China's mining crackdown forced machines offline before they relocated and came back online elsewhere. According to Zagury: "What we're seeing now, it's very different". This time, hashrate is falling because mining infrastructure has gained another potential buyer in AI, which values the same power, land and grid connections that bitcoin data centers were built around.
Miners Are Signing AI Contracts Instead of Expanding Bitcoin Capacity
The shift is already visible across the industry. Keel Infrastructure shut down all of its U.S. bitcoin mining operations and ended the period with about $819 million in liquidity to fund its move into AI and HPC sites.
Bitdeer signed a 16-year AI infrastructure agreement worth about $4.7 billion for 121 megawatts of computing capacity at its Tydal campus in Norway, a deal that could reach roughly $8 billion if an extension is exercised. Hut 8 secured a $9.8 billion, 15-year AI infrastructure lease covering 352 megawatts at its Beacon Point campus in Texas, part of a broader contracted AI portfolio spanning 949 megawatts.
Those deals back Zagury's warning that large public miners are increasingly reconsidering pure-play bitcoin mining. For operators that stay committed to bitcoin, however, the shrinking competition could work in their favor as rival hashrate keeps disappearing.
Source: Bitcoin News
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