Bitcoin miners have lived through crashes, bans and boom cycles before, but according to Twenty One Capital CEO Rapha Zagury, the network is now facing something it has never experienced: a Bitcoin hashrate bear market. Speaking at Bitcoin Asia 2026 in Hong Kong, Zagury argued that computing power dedicated to securing the network has fallen into its longest and most unusual slump on record, one driven less by a sudden shock and more by a structural rethink of what mining infrastructure should even be used for.
Summary
Key takeaways
- Twenty One Capital CEO Rapha Zagury says Bitcoin is in its first-ever hashrate bear market, with computing power still below its late-2025 peak.
- Bitcoin’s network hashrate reached close to 1.3 zettahashes per second late last year before entering a steady decline, down an estimated 22% to 24% from that peak, according to presentation materials filed with the SEC.
- Zagury calls this the longest stretch the network has ever recorded between an all-time hashrate high and a full recovery.
- Nearly all publicly listed mining companies are redirecting investment away from large-scale Bitcoin mining toward artificial intelligence and high-performance computing, though several, including MARA, CleanSpark, Riot and Bitdeer, still run substantial mining fleets.
- Zagury says mining profitability hinges more on cost management and capital structure than on Bitcoin’s price, and defends mining’s flexible energy use as a benefit rather than a waste.
Bitcoin’s First-Ever Hashrate Bear Market
Zagury’s core claim is straightforward: Bitcoin’s hashrate has stayed below its previous record for longer than at any point in the network’s history, and that gap defines what he calls the first true hashrate bear market. He unveiled the idea during a keynote titled “Here Be Dragons,” delivered on August 28 at the Nakamoto Stage, opening with a reference to old navigational maps that marked unexplored waters as uncharted territory. Twenty One Capital later filed the prepared transcript with the U.S. Securities and Exchange Commission.
Hashrate Peak and Decline
Bitcoin’s network hashrate climbed to nearly 1.3 zettahashes per second late last year before turning downward. Presentation materials tied to Zagury’s talk estimated the pullback at roughly 22% to 24% from that peak. Separate data has shown Bitcoin mining difficulty falling close to 19.9% from its November high by late July, with the network stuck in a downward trend for around 287 days, according to figures previously reported using Bitcoin Magazine Pro data. Because Bitcoin does not publish an exact machine count, hashrate is inferred from block production and difficulty, so daily estimates swing. CoinWarz put the network at roughly 829 exahashes per second on September 2, after several days in late August when readings briefly climbed back above one zettahash.
Longest Recovery Cycle on Record
What makes this decline notable isn’t just its size but its duration. “This has been the longest period that we’ve seen from an all-time high until recovery,” Zagury said. He drew a direct contrast with the 2021 shock, when China’s mining ban forced a rapid but temporary hashrate collapse as machines were relocated to North America and Central Asia and network power bounced back within months. This time, he argued, the decline is gradual because operators aren’t simply moving the same machines elsewhere — they’re questioning whether new electricity and data center capacity should go toward Bitcoin mining at all.
Mining Industry’s Shift to AI and High-Performance Computing
The reason this hashrate slump looks different, in Zagury’s telling, is that artificial intelligence now gives miners a competing use for the same scarce resources: power connections, cooling systems, land and capital. “If you look at the public mining companies out there, there really isn’t anybody staying the course to mine Bitcoin at scale,” Zagury said. “Pretty much everybody is leaving the industry right now.”
Which Public Miners Are Pivoting
That statement captures a broad trend rather than a universal one. Companies including MARA, CleanSpark, Riot and Bitdeer continue to run large Bitcoin mining operations even as some explore high-performance computing on the side. The pivot is furthest along at TeraWulf, IREN, Core Scientific, HIVE and Cipher. TeraWulf reported $21 million in AI and HPC hosting revenue in the first quarter, overtaking its Bitcoin mining revenue for the first time and making AI its largest single revenue source. Cipher, meanwhile, secured a $200 million revolving credit facility to fund its expansion into long-term AI data center contracts. Converting a mining site into an AI facility isn’t simple — it requires different chips, networking gear and construction standards — but sites with secured power and fiber access already offer a head start toward that kind of build-out.
This is where the mining-to-AI shift starts to matter beyond the mining sector itself. Investors weighing exposure to Bitcoin mining stocks are increasingly also betting on AI infrastructure demand, and companies that control the best power sites may be positioned to benefit from both trends at once — something Zagury suggested current valuations don’t fully reflect.
Economic and Energy Perspectives on Bitcoin Mining
Beyond the headline decline, Zagury used his keynote to push back on two long-standing criticisms of Bitcoin mining: that it’s a fundamentally weak business and that it wastes electricity. Neither holds up, he argued, once cost structure and energy flexibility are properly accounted for.
Profitability Beyond Bitcoin’s Price
Zagury framed mining as a commodity business where success depends on where an operator sits on the cost curve, not on the price of the commodity itself. Bitcoin’s difficulty adjustment — which recalibrates roughly every 2,016 blocks, or about every two weeks, to keep block production near ten minutes — makes the network unusually resistant to oversupply, unlike oil markets where higher prices typically draw in more competing supply. Comparing two hypothetical miners with different electricity costs and equipment, Zagury said capital structure and cost management, not Bitcoin’s price swings, ultimately decide who survives. He pointed to past mining failures as evidence that weak cost positioning, rather than market conditions, was usually the real culprit. There’s an upside built into the current downturn, too: as hashrate leaves the network and difficulty adjusts downward, “for those that stay around, they naturally get a higher share of the market,” he said — though that doesn’t automatically translate into higher profits, since revenue still depends on Bitcoin’s price, fees, electricity costs and remaining competition. For anyone deciding how to allocate capital, Zagury kept his advice simple: “If you only have $1, buy Bitcoin first. I think that’s the best way to express your view.”
Energy Flexibility and Grid Stability
On the energy question, Zagury argued mining machines can be switched on or off almost instantly, making them one of the most flexible industrial loads available — a trait that lets miners participate in grid stabilization efforts, particularly in markets with variable renewable generation, and support grid stability rather than simply drain it. He contrasted this with AI data centers, which typically need steadier power since customer workloads can’t be interrupted as easily, suggesting Bitcoin mining could keep a role at sites where electricity is abundant but unreliable or hard to transmit economically. To make his point about energy’s broader value, he referenced a project in Manicoré, a town in the Brazilian Amazon, where the lack of reliable electricity had limited access to medicine and refrigeration. “Energy is the substrate of everything that we call development,” he told the audience. He summed up mining’s current appeal as four overlapping forms of optionality: flexible energy demand, a larger network share as competitors exit, closeness to Bitcoin’s protocol, and infrastructure that can be reused for other computing needs — benefits he believes remain underpriced in how mining companies are valued today.
FAQ
What does “hashrate bear market” mean in the context of Bitcoin?
It refers to an unusually long decline in Bitcoin’s network computing power without a return to previous all-time highs, a term used by Twenty One Capital CEO Rapha Zagury to describe the current cycle rather than an official Bitcoin classification.
Why are publicly listed Bitcoin mining companies shifting to AI and HPC infrastructure?
Mining companies are diversifying because artificial intelligence and high-performance computing create competing demand for the same power capacity, land and infrastructure that mining relies on, and some, like TeraWulf and Cipher, have found AI hosting more lucrative than mining alone.
How does Bitcoin mining’s difficulty adjustment affect supply and competition?
The difficulty adjustment recalibrates roughly every two weeks to keep block production near ten minutes, which prevents oversupply even as hashrate fluctuates and can boost the network share of miners who stay active when others exit.
Is Bitcoin mining inherently energy-inefficient or unprofitable?
According to Rapha Zagury, mining is neither inherently a poor business nor a wasteful use of energy when operators manage costs and capital structure properly, and its flexible power demand can even support grid stability.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
