Bitcoin Mining's AI Shift: A New Era for Hashrate and Valuation

Bitcoin mining has entered its first hashrate bear market, according to Twenty One Capital CEO Rapha Zagury. This decline is different from previous disruptions because miners now have an alternative large-scale use for their infrastructure: artificial intelligence and high-performance computing.

The current slowdown in network hashrate 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 HPC instead of returning to Bitcoin mining as market conditions improve.

Public miners are diversifying into AI data centers as mining margins tighten. Listed miners such as Core Scientific, IREN, TeraWulf, Riot Platforms, CleanSpark, and Bitdeer have pursued AI, HPC, or broader data-center expansion. However, the transition requires major upgrades, including new servers, cooling systems, networking, and power systems.

Bitcoin traders should focus on key indicators such as hashrate, mining difficulty, miner selling pressure, and network security. 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.