Bitcoin Hashrate Enters First-Ever Bear Market
Bitcoin is facing an unprecedented downturn in its mining infrastructure. Raphael Zagury, CEO of Twenty One Capital, declared on Wednesday that Bitcoin has entered its first hashrate bear market, a historic shift for the network’s computational power.
Hashrate, the total computing power securing the Bitcoin network, has been declining for months. This marks the first sustained contraction since Bitcoin’s early days, according to Zagury. The CEO attributes this decline to a major reallocation of resources by publicly listed mining companies.
Listed Miners Redirect Capacity Toward AI Boom
The core driver, Zagury explains, is the lucrative pivot toward artificial intelligence. Major listed miners are redirecting their energy and computing capacity away from Bitcoin mining to serve AI data centers, which offer more stable and higher revenue streams.
This trend has accelerated through 2026. As AI demand surges, miners with access to cheap power and advanced infrastructure are finding it more profitable to host AI workloads than to mine Bitcoin. This has led to a significant reduction in hashrate dedicated to the Bitcoin network.
What a Hashrate Bear Market Means for Bitcoin Price
The implications for Bitcoin’s price are complex. A lower hashrate can reduce mining difficulty, potentially lowering selling pressure from miners. However, it also signals reduced network security and miner confidence, which could weigh on sentiment.
As of September 2, 2026, Bitcoin trades at $67,200, down 12% from its July high. The hashrate decline has coincided with a period of consolidation, as investors weigh the impact of miner migration against broader macroeconomic factors.
AI Diversification vs. Bitcoin Network Health
The pivot to AI creates a fundamental tension. While miners diversify revenue, the Bitcoin network suffers from reduced hashpower. Zagury warns that this could lead to a prolonged period of lower network security unless Bitcoin’s price rises to incentivize miners to return.
Publicly traded miners like Marathon Digital and Riot Platforms have announced AI partnerships in recent months. These deals often involve converting existing mining facilities into high-performance computing centers, a process that is both time-consuming and capital-intensive.
Historical Context and What’s Next for Hashrate
Historically, hashrate has only dipped temporarily during events like China’s 2021 mining ban. The current decline is different—it is a strategic reallocation, not a regulatory shock. This makes the recovery timeline uncertain.
Zagury notes that if Bitcoin’s price remains subdued, the hashrate bear market could persist. Conversely, a significant price rally could alter the calculus, making mining more competitive with AI hosting.
Investors should watch the upcoming ORIGIN SEOUL 2026 conference, running through September 2 in Seoul, where miners and industry leaders are discussing these exact dynamics. Any announcements about new mining capacity or AI deals will be crucial.
Key Metrics to Monitor in the Coming Weeks
To gauge whether the hashrate bear market is easing, watch the total hashrate on a weekly basis. A sustained uptick would signal miner confidence returning. Also monitor the network’s difficulty adjustment, which recalibrates every two weeks.
The next difficulty adjustment is expected on September 9. If difficulty drops sharply again, it confirms the hashrate contraction is deepening. If it stabilizes or rises, the pivot may be slowing.
Bitcoin’s price action around the $70,000 level will be critical. A break above could incentivize miners to recommit to Bitcoin, while a drop below $60,000 would likely accelerate the exodus to AI.
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