Twenty One Capital CEO Raphael Zagury has publicly declared that Bitcoin is experiencing its first 'hashrate bear market' as network computing power remains below its late 2025 record. According to reports from Twenty One Capital, Bitcoin hashrate fell roughly 22% to 24% from its peak, with the network approaching 1.3 zettahashes per second late last year before entering the prolonged decline. The network's hashrate remains approximately 20.6% below its October 2025 peak, with a seven-day average hovering near 914 exahashes per second. This marks the longest stretch between an all-time high and a full recovery in the blockchain's history, with hashrate spending 316 consecutive days below its record high. The decline followed months of weak mining economics, summer power curtailments and a growing shift by some operators toward artificial intelligence and high-performance computing. As reported by CoinDesk, mining difficulty dropped 11.16% in February 2026 and another 10.09% in June, with the network hashrate falling toward 900 EH/s several times since October 2025.
As reported by Twenty One Capital, artificial intelligence creates a competing use for miners' power capacity and infrastructure worldwide. Public mining companies are permanently diverting data center capacity to AI and high-performance computing (HPC) due to superior infrastructure returns. Miners control critical assets including power contracts, data center space, and grid connections that are in high demand from AI developers. IRENIREN reduced its self-mining capacity from 50 EH/s to 23.2 EH/s to deploy 40 MW of AI Cloud capacity, while TeraWulf reported 102 MW of critical-IT capacity energized in July alongside 145 MW of legacy Bitcoin mining capacity. Riot Platforms highlighted how long alternative commitments can last when it signed a $9 billion, 20-year compute agreement with Anthropic in August, locking in power allocations that cannot be quickly redirected back to mining. Some operators are still expanding aggressively, with MARA reporting 70.3 EH/s of energized hashrate as of June 30 and Bitdeer reaching 76.7 EH/s of self-mining capacity in July. Core Scientific reported a negative 56% gross margin from self-mining in the second quarter, while its data-center colocation business generated nearly $80 million in gross profit, and TeraWulf noted that HPC leasing produced about 71% of quarterly revenue.
According to Twenty One Capital's analysis, lower network hashrate can increase surviving miners' revenue share after Bitcoin adjusts mining difficulty downward. Bitcoin adjusts mining difficulty every 2,016 blocks, or approximately every two weeks, to keep average block production close to ten minutes. The protocol eventually reduces difficulty when hashrate falls, allowing remaining miners to compete for the same block subsidy with less computing power. Recent data shows signs of recovery emerging in August, with VanEck estimating network hashrate at roughly 885 EH/s in the week through August 11, while mining difficulty stood 18.3% below its November 2025 peak. The August 8 difficulty adjustment rose 1%, the first upward move in the sequence, as hashrate recovered toward 925 EH/s. By August 31, Hashrate Index put seven-day hashrate at 915 EH/s, up 3.3% from 886 EH/s a week earlier, with blocks arriving every 9 minutes and 56 seconds. Hashprice had improved to $39.36 per petahash per second per day, above its 30-day average of $34.63.
As reported by Twenty One Capital, mining has the best chance of outperforming Bitcoin when the asset's price increases faster than network hashrate. If Bitcoin rises by 50% while hashrate remains flat, a miner's revenue can increase without an equivalent rise in competition. However, the current situation presents unique challenges as some power and data-center capacity leaving Bitcoin now has somewhere else to go. The Puell Multiple, which compares the dollar value of daily Bitcoin issuance with its one-year average, averaged about 0.73 over the preceding 30 days, placing it in the 16th percentile and pointing to unusually weak miner revenue conditions. The next phase of Bitcoin's hashrate recovery will show how much capacity was merely idle and how much has effectively moved on. The question now is whether improving Bitcoin prices, hashprice and difficulty economics can pull enough idle machines back to end the 316-day drought. If they cannot, the reason may increasingly lie outside Bitcoin itself: some of the infrastructure that once waited for the next mining recovery is now being paid to stay somewhere else. As CoinDesk reports, AI will make premium power sites more expensive and render some mining models uneconomical, but it is unlikely to eliminate Bitcoin mining entirely, instead separating reliable infrastructure-rich power for AI while mining migrates toward cheaper and less conventional energy.
Despite Bitcoin's hashrate challenges, Ethereum has demonstrated remarkable resilience during current geopolitical tensions. According to Bitmine Immersion Technologies, Ethereum's price rose over 6.2% in the last 24 hours to around $2,150, outperforming Bitcoin which rose around 4%. Bitmine announced it added 71,252 Ethereum in its largest weekly purchase of the year, bringing its total holdings to 4,803,334 ETH, which accounts for about 3.98% of the altcoin's total circulating supply. The company has staked around 3,334,637 Ethereum, worth around $7.1 billion, with its total crypto and cash holdings standing at $11.4 billion. Bitmine also announced approval for uplisting to the New York Stock Exchange from the NYSE American, with shares gaining more than 3% in pre-market trade. Chairman Tom Lee described Ethereum's resilience during the current U.S.-Iran war as a 'great harbinger' of broader market strength, noting that Ethereum has been the second-best performing asset as the war enters its sixth week.
