For the first time in six years, bitcoin Hashrate, the total computing power securing the network, fell during the first quarter. It is currently down about 4% year to date, hovering around 1 zettahash per second (ZH/s).
Over the past five years, the rate has increased from around 100 exahashes per second (EH/s), a 10-fold increase, according to Glassnode data. Each year, the indicator increased during the first quarter and ended with strong annual growth above 10%. In 2022, this figure will almost double.
The pivot of AI
The change in 2026 reflects the changing economics in the bitcoin mining sector. With production costs near $90,000 per bitcoin and a spot price near $67,000, margins are negative. In response, many publicly traded mining companies are turning to artificial intelligence and high-performance computing infrastructure, where returns are higher and more predictable.
This transition is financed by issuing debt and selling bitcoins, thereby reducing reinvestments in bitcoin mining. As a result, hashrate growth becomes more sensitive to the price of the cryptocurrency, with weak prices likely to trigger further declines as smaller operators exit.
Although a drop in hashrate may raise concerns about network security, decentralization may be more important than absolute size. Publicly traded U.S. mining companies account for more than 40% of the global hash rate, and a reduction in their influence could lead to a more geographically distributed network. In this sense, the current change could, in the long term, favor decentralization.
Despite the slowdown, CoinShares still forecasts hashrate growth at around 1.8 ZH/s by the end of 2026, provided Bitcoin climbs back towards $100,000.
Learn more: End of Bitcoin “HODL”: Public Miners Go All-In on AI, Reporting More BTC Sales
