Bitcoin Enters First Hashrate Bear Market Amid Shift to AI

Bitcoin's network computing power has declined about 22-24% from its late 2025 peak, marking what Twenty One Capital CEO Raphael Zagury calls the first 'hashrate bear market.' This prolonged drop differs from the sharp decline in 2021 caused by China's mining ban. Miners are now redirecting infrastructure investment towards artificial intelligence (AI) data centers, which compete for similar resources.

While some mining companies continue large Bitcoin operations, many are shifting to AI hosting, benefiting from lower network difficulty and potentially higher revenue share for remaining miners. The sector's future will depend on Bitcoin price trends, mining costs, and how companies balance mining with AI ventures.