Bitcoin is in its first sustained bear market for network hashrate, according to Rapha Zagury, CEO of Twenty One Capital. The decline marks a break from the pattern of steady growth that miners have relied on for years, and it's happening just as the industry faces a new kind of competition for electricity and data-center space.
What the data shows
Zagury's assessment points to a prolonged drop in the total computational power securing the Bitcoin network. Hashrate has historically trended upward even during price slumps, as miners added machines and brought new facilities online. This time is different. The sustained decline suggests miners are pulling machines offline or holding back on expansion.
The exact numbers behind the trend weren't disclosed, but the direction is clear enough. A bear market in hashrate means the network's computing muscle is shrinking, not just stagnating.
The AI squeeze
The shift is being driven by more than just Bitcoin's price. Miners are increasingly competing with artificial intelligence and high-performance computing companies for the same resources: cheap power, cooling, and large-scale infrastructure.
That competition is reshaping the economics of mining. Data centers that once housed Bitcoin rigs can now command higher rents from AI firms. Power contracts that miners signed years ago are being renegotiated or sold off. In some cases, miners are converting their facilities to host AI workloads instead of SHA-256 chips.
Zagury's point is that this isn't a temporary blip. The hashrate decline reflects a structural change in how the industry allocates capital and energy.
For operators, the math has gotten harder. If hashrate keeps falling, the network's difficulty adjustment will eventually make mining less competitive, which could stabilize margins for those who stay. But the bigger question is whether miners can justify new builds when AI firms are willing to pay more for the same megawatts.
The next few months will show whether this is a floor or a new baseline. If power costs stay high and AI demand keeps growing, the hashrate bear market could persist well beyond the current cycle.
