Bitcoin is experiencing what Twenty One Capital CEO Rapha Zagury described as its first-ever “hashrate bear market,” with miners increasingly redirecting infrastructure toward artificial intelligence and high-performance computing, according to comments reported by @WuBlockchain.

Speaking at Bitcoin Asia 2026, Zagury said Bitcoin’s network hashrate approached 1.3 ZH/s at the end of last year before entering a sustained decline. He described the current downturn as the longest cycle so far between a hashrate all-time high and a subsequent recovery.

Bitcoin Mining Faces Competition From AI Infrastructure

Zagury said the current hashrate decline differs from the market disruption that followed China’s 2021 cryptocurrency mining ban. At that time, miners primarily relocated equipment and operations to other jurisdictions before the network’s computing power gradually recovered.

The current environment presents a different challenge because mining companies now have alternative uses for their energy, computing infrastructure, and data-center capacity. Artificial intelligence and high-performance computing have emerged as competing sources of demand, giving operators additional options for deploying infrastructure that would otherwise be dedicated to Bitcoin mining.

That matters for an industry built around specialized hardware and thin operating margins, where decisions are shaped by electricity costs, network difficulty, and access to capital. If miners can earn revenue from AI and HPC workloads, they may have more flexibility in how they use the same power and data-center footprint that previously supported only Bitcoin operations.

The shift could alter the economics of the mining industry. Bitcoin miners have historically relied on specialized equipment designed specifically for securing the network and processing transactions. AI and HPC workloads, by contrast, can create opportunities to generate revenue from data-center infrastructure beyond cryptocurrency mining.

Public Bitcoin Miners Increasingly Target AI

Zagury said nearly all publicly listed mining companies are moving away from pure large-scale Bitcoin mining and shifting toward AI.

The trend represents a significant change in strategy for an industry whose business models have traditionally been closely tied to Bitcoin’s price, mining difficulty, network hashrate, and electricity costs. Diversification into AI-related infrastructure could provide miners with another source of revenue, but it also means capital and capacity may increasingly be allocated according to demand from the broader computing market.

For Bitcoin, a prolonged reduction in hashrate would affect the competitive landscape among miners and the distribution of network computing power. The extent and duration of the shift will depend on the relative economics of Bitcoin mining compared with AI and HPC infrastructure.

The key issue for the industry now is whether Bitcoin’s hashrate can recover from its extended decline or whether AI-driven infrastructure demand will establish a longer-term structural shift in how major mining companies deploy their computing capacity.

Writer: Victoria Hale, Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy. She prioritises clarity and accuracy when explaining technical developments to a general audience.

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