Bitcoin's Hashrate Enters Its First Bear Market as AI Bids for Power
Network hashrate is down more than a fifth from its peak. The competition is no longer other miners.
Bitcoin's network hashrate has fallen an estimated 22% to 24% from the peak near 1.3 zettahashes per second reached late last year — what Twenty One Capital's Rapha Zagury has described as the first genuine bear market in hashrate in Bitcoin's history.
The figures have been noisy. Seven-day averages sat near 914 to 915 EH/s at the end of August, with a daily snapshot on 4 September touching roughly 1,001 EH/s. Daily prints swing widely; the trend does not.
What changed
Every previous hashrate decline had the same cause: price fell far enough, or difficulty rose fast enough, that marginal machines stopped covering their electricity. This one has a different driver. Miners are not being pushed out by other miners. They are being outbid for power and for sites by AI compute, which values the same interconnects and the same megawatts and can pay considerably more per kilowatt-hour for them.
Several operators have moved rather than closed. Contracted capacity that was hashing a year ago is now running inference, and at least one listed miner has said it will be out of mining entirely by year end. That is a business decision, not a distress signal, and it is being made by companies with functioning balance sheets.
The consequences for the network
Difficulty adjusts, so security budget and block times normalise within weeks. The durable effects are elsewhere. Hashprice has risen sharply — 22% on one recent adjustment — which improves economics for whoever remains. Geographic concentration is shifting toward regions where power is cheap and AI demand has not yet arrived. And the industry's counterparty mix is changing as hosting arrangements replace owned capacity.
What it does not mean
A falling hashrate is not evidence of a weakening network in any sense a user experiences. Blocks arrive on schedule, fees are unremarkable, and the cost of attacking the chain remains far beyond any plausible adversary. What it signals is that bitcoin mining now competes in a market it does not set the price in.