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Bitcoin (BTC) mining economics are shifting majorly.
For the first time in six years, Bitcoin’s network computing power, better known as hashrate, has declined during the first quarter.
Hashrate typically falls when fewer miners are active. This is often because mining becomes too expensive. As margins shrink, smaller or less efficient operators are forced offline.
Related: Wall Street bank warns on falling profits despite Bitcoin hashrate boom
Moreover, many publicly listed mining firms are pivoting toward artificial intelligence (AI) and high-performance computing (HPC), where returns are comparatively stable.
This is a vicious cycle that seems to be picking up speed.
The metric, which measures the total computational power securing the Bitcoin network, has historically trended upward, making this reversal notable.
Over the past five years, Bitcoin’s hashrate has surged from about 100 exahashes per second (EH/s) to nearly 1 ZH/s, which is a tenfold increase.
Each year, the network saw consistent first-quarter growth followed by full-year gains exceeding 10%. In 2022 alone, hashrate nearly doubled.
This long-standing trend reflected rising miner participation and increasing investment in infrastructure.
However, 2026 marks the first time this pattern has broken, the first first-quarter decline since 2020.
As per Glassnode data, Bitcoin hashrate is down roughly 4% year-to-date, hovering around 1 zettahash per second (ZH/s).
The primary driver behind the decline is profitability pressure. Production costs for Bitcoin are now $90,000 per coin, while the market price sits closer to $67,000, leaving many miners operating at a loss.
Jake Kennis, senior research analyst at Nansen, told TheStreet Roundtable, that although the decline was significant, it should not be assumed as outright hashrate stagnation yet.
"It is a possible shift in capital allocation away from pure play mining among public miners. Whether that becomes a lasting structural change depends on whether private and lower cost operators absorb the displaced supply," he added.
While a falling hashrate can raise concerns about network security, the broader impact may be more nuanced.
Miners publicly listed in the United States account for about 41% of global hashrate, as per a JPMorgan report in January. But could their waning dominance make the network more distributed and decentralized?
"There are many ways to measure decentralization, and hashrate is only one of them. A decline in hashrate does not inherently improve decentralization," Kennis said.
He explained that decentralization only works when we know who is replacing the lost capacity and how the ownership is distributed.
The likely outcome, as per Kennis, is a "bifurcated market" where large AI-mining firms dominate the top, low-cost miners grow at the edges, and mid-tier players get squeezed with decentralization driven more by distribution than total hashrate.
CoinShares data revealed that over $70 billion worth of deals have been announced for AI/HPC by mining giants like TeraWulf (NASDAQ: WULF), Core Scientific (NASDAQ: CORZ), Cipher Digital Inc (NASDAQ: CIFR) and Hut 8 Corp (NASDAQ: HUT).
Kennis explained that this shift is serious and not just for show.
"It should reduce future hashrate growth from the public miner cohort as capital, power, and buildout capacity are redirected toward AI infrastructure, even if total network hashrate can still grow through private and lower cost operators," he said.
Hashrate remains critical for miners, as it determines their ability to compete for rewards and maintain profitability. As total network power declines, mining difficulty adjusts, but long-term viability still depends on price recovery.
Despite the slowdown, CoinShares forecasts that hashrate could reach 1.8 ZH/s by the end of 2026, if Bitcoin rebounds toward $100,000.
But Bitcoin is far away from the $100,000 range that was last seen in October 2025. Now, at press time, it was trading at $66,515.65, having dropped 0.2% in the past 24 hours, as per CoinGecko.
