Bitcoin: Hashrate faces its first 'bear market' against AI, says Twenty One Capital

The computational power behind the Bitcoin network, or 'hashrate,' is reportedly enduring its very first bear market. This is the view shared by Rapha Zagury, head of Twenty One Capital, at the Bitcoin Asia 2026 conference in Hong Kong. It is an unprecedented situation, marking a sharp contrast to 2021, with artificial intelligence (AI) now playing a central role. The article Bitcoin: Hashrate faces its first 'bear market' against AI, says Twenty One Capital first appeared on Cryptoast.

The Bitcoin mining sector is navigating a historic turning point. According to Rapha Zagury, CEO of Twenty One Capital, the network is currently facing its first true hashrate "bear market," characterized by a prolonged decline in the computing power dedicated to securing the blockchain. While the hashrate peaked at 1.3 zettahashes per second (ZH/s) in late 2025, it has since undergone a correction estimated at around 31%. Beyond the decline itself, the duration of this stagnation is what concerns observers, marking a sharp break from the frantic growth cycles seen in the past.

This situation is primarily driven by new, fierce competition: artificial intelligence (AI). Energy infrastructures, once reserved exclusively for mining rigs, are now being aggressively sought after by high-performance computing (HPC) providers. Many publicly traded miners have executed a strategic pivot, reallocating their power capacity toward lucrative contracts with tech giants like Microsoft, Google, and Amazon. This shift of megawatts toward AI-dedicated servers is restricting the resources available for Bitcoin mining.

Despite this contraction, the dynamic holds a paradox that could benefit the most resilient miners. The automatic difficulty adjustment mechanism, a cornerstone of Satoshi Nakamoto's code, ensures that the protocol remains functional regardless of changes in computing power. For companies that persist in mining, this global reduction in hashrate mechanically means a larger share of block rewards for every unit of power kept operational. Mining distinguishes itself from any other commodity through this inelastic supply, making the asset unique within the global financial ecosystem.

Furthermore, the operational flexibility of Bitcoin mining continues to represent a major strategic asset. Unlike heavy industries, mining farms can halt or resume operations instantly, offering a valuable solution for stabilizing power grids facing energy surpluses. As the political perception of mining evolves, these players are becoming preferred partners for governments and utility providers. For investors, the equation remains clear: as long as Bitcoin's valuation grows faster than the hashrate, the activity remains economically viable, despite the pressure exerted by the spectacular rise of AI.