- Bitcoin enters its first hashrate bear market as miners redirect power to AI/HPC.
- Public miners are diversifying into AI data centers as mining margins tighten.
- Bitcoin mining companies may depend more on cheap power and AI exposure than Bitcoin alone.
Bitcoin mining is entering an unusual phase as operators decide whether power, data-center capacity and capital should keep securing the Bitcoin network or move toward artificial intelligence and high-performance computing.
Twenty One Capital CEO Rapha Zagury described the current period as Bitcoin’s first hashrate bear market, arguing that the decline differs from earlier disruptions because miners now have another large-scale use for their infrastructure. That change is also changing the BTC trade as investors weigh Bitcoin exposure against energy costs and AI opportunities.
Bitcoin Mining Faces a Different Hashrate Decline
Zagury said network hashrate reached close to 1.3 zettahashes late last year before beginning a gradual decline. He contrasted that pattern with the 2021 China mining ban, when hashrate fell and later recovered as machines relocated.
The current slowdown has lasted longer than the previous peak, suggesting a more structural shift rather than a temporary disruption. Unlike earlier cycles, mining capacity now has alternative uses, with infrastructure increasingly being redirected toward AI and high-performance computing (HPC) instead of returning to Bitcoin mining as market conditions improve.
That matters because rising network hashrate reduces an individual miner’s share of block rewards. Conversely, miners that remain online while competitors leave can gain network share, provided their energy and operating costs remain competitive.
Public Miners Redirect Infrastructure Toward AI
Listed miners are already moving beyond pure-play Bitcoin strategies. Core Scientific, IREN, TeraWulf, Riot Platforms, CleanSpark and Bitdeer have pursued AI, HPC or broader data-center expansion.
However, the transition requires major upgrades. Bitcoin ASICs cannot perform AI workloads, while HPC facilities need different servers, cooling, networking, and power systems. Those costs add pressure on miners already operating at relatively low hash rates.
Higher-cost operators therefore face several options: shut down inefficient machines, sell assets, raise capital, or redirect infrastructure toward other workloads.
What Bitcoin Traders Need to Watch
For Bitcoin, traders should focus on key indicators such as hashrate, mining difficulty, miner selling pressure, and network security. Difficulty adjusts every 2,016 blocks, roughly every two weeks, to keep average block production near 10 minutes. At the same time, weaker profitability can increase pressure on miners to sell BTC reserves.
For Bitcoin mining companies, a Bitcoin rally may no longer guarantee outperformance. Access to cheap power, balance-sheet strength, and AI or HPC conversion possibility now matter alongside the BTC price.
As a result, the valuation framework is shifting. Bitcoin miners may begin to trade more like AI infrastructure companies with Bitcoin exposure, rather than purely as crypto-linked equities.
Related: Bitcoin vs. Nasdaq: Is AI-Driven Capital Rotation Keeping BTC From Breaking Out?
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