Twenty One Capital CEO Raphael Zagury said Bitcoin is experiencing its first “hashrate bear market” as network computing power remains well below its late-2025 peak. He made the remarks during a keynote at Bitcoin Asia in Hong Kong.
Zagury noted that hashrate approached 1.3 zettahashes per second before entering a prolonged decline of roughly 22% to 24%. Public mining companies are increasingly redirecting power capacity and infrastructure toward artificial intelligence and high-performance computing.
The Drivers of This Development
Unlike previous sharp drops, such as the 2021 China mining ban that was followed by relatively rapid recovery through machine relocation, the current period reflects sustained economic pressure and competing demand for energy and data-center resources. Hashrate has failed to set a new all-time high for an extended stretch, described as the longest in a decade. Zagury highlighted that nearly all listed mining firms are shifting focus away from pure Bitcoin mining toward AI and HPC opportunities, which offer alternative revenue streams from the same power infrastructure. For perspective, presentation materials filed with the SEC framed the situation as Bitcoin’s first real economic hashrate bear market of its industrial era, distinct from temporary disruptions.
It is important to note the fundamental difference between a temporary hashrate decline driven by external bans or weather events and a prolonged, economics-driven reduction amid rising alternative uses for mining infrastructure: the former typically reverses with relocation or improved conditions, while the latter may alter the long-term cost structure and participant mix of the network.
Impact and Broader Context
A lower hashrate environment can improve mining economics for remaining operators by reducing difficulty and competition, potentially allowing efficient miners to capture greater network share. At the same time, the pivot of public companies toward AI raises questions about future hashrate growth trajectories if Bitcoin prices do not rise sufficiently to compete with high-performance computing returns. Energy flexibility remains a noted advantage for miners that can switch between Bitcoin and other compute loads.
This development sparks important discussions about the evolving role of Bitcoin mining in the broader energy and compute landscape. Supporters of the current dynamic argue that competition from AI forces greater efficiency and creates optionality that strengthens resilient operators. Critics or long-term network observers express concern that sustained capital flight from pure mining could slow security growth or concentrate hashrate among fewer players. Analysts observe that the divergence between recent Bitcoin price recovery and lagging hashrate represents a rare historical pattern that may reverse if mining profitability improves relative to alternative uses of power.
Looking ahead, the pace of any hashrate recovery and the extent of permanent AI conversions among major miners will determine whether the current phase remains temporary or marks a structural shift. This analysis is based on Zagury’s public remarks, the related SEC filing, and contemporaneous reporting for accuracy and reliability. Network hashrate levels and industry capital allocation remain subject to ongoing market and technological developments.