Bitcoin’s network hashrate fell 4% in Q1 2026 (the first quarterly decline since 2020), hovering around 1 ZH/s. This stems from unprofitable operations shutting down rigs amid high production costs ($80k+ per BTC vs. lower spot prices) and major listed miners redirecting power and capital to higher-margin AI/HPC infrastructure.

Public miners have announced tens of billions in AI contracts, with projections that AI could make up 70% of their revenue by year-end.

This shift may improve network decentralization (as hashpower moves to smaller/distributed operators) but highlights profitability pressures post-halving and price correction.

Difficulty has also seen notable drops, with more potential adjustments ahead.


Difficulty has also seen notable drops, with more potential adjustments ahead.

Several analysts note that the current contraction resembles prior post-halving compression cycles, where inefficient fleets exit before new-generation hardware restores equilibrium.

Smaller operators with access to stranded or ultra-low-cost energy are stepping in to absorb some of the abandoned capacity, though at a slower pace than the rate of shutdowns.

Meanwhile, ASIC manufacturers are facing delayed upgrade cycles as miners prioritize AI infrastructure over fleet refreshes. The resulting supply-demand imbalance in hardware markets is pushing secondary ASIC prices to multi-year lows.

If these trends persist, Q2 could mark one of the most significant structural reshuffles in mining economics since the 2020–2021 expansion phase.

This is the dominant industry narrative right now, covered widely by CoinDesk, CoinShares, and others.

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