Since May 28, 2026, Bitcoin’s hash rate has contracted by roughly 14%. Network hash rate dropped from around 1,030 EH/s to 885 EH/s, a net outflow of 145 EH/s. This marks the largest exodus of hash rate from the Bitcoin network since 2020.
What makes this event unique isn’t the contraction itself, but its combination of factors: the hash rate decline occurred after the halving cycle and overlapped with a drop in Hashprice and changes to miners’ balance sheets. Rapha Zagury, CEO of Elektron Energy, has called this Bitcoin’s first-ever "hash rate bear market"—a sustained contraction driven by market forces rather than structural network weaknesses.
Is the 145 EH/s Outflow Due to Forced Shutdowns or Strategic Shifts?
When hash rate drops significantly, the market usually attributes it to miners shutting down due to declining profitability. This 145 EH/s outflow, however, has a dual nature: both passive shutdowns and proactive business transformation.
Passive shutdowns are driven by profitability. As of June 7, 2026, Hashprice—the daily mining revenue per 1 PH/s—fell to about $28.26 per PH/s, down 26.96% from 30 days prior. On-chain transaction fees made up less than 1% of miner rewards, and block production times deviated from the protocol’s 10-minute target, averaging about 11 minutes and 12 seconds. When per-unit mining revenue keeps falling and fees can’t fill the gap, shutting down high-cost equipment becomes the rational economic choice for miners.
However, proactive transformation is also a major factor. According to Hashrate Index data, Bitcoin’s network hash rate had grown almost uninterrupted for six years before this reversal. The current 145 EH/s drop is the first sustained contraction in that period. Several publicly traded mining firms made it clear in Q1 2026 that they were reducing mining operations and reallocating power and infrastructure to AI and high-performance computing. This means some of the hash rate reduction is not from unprofitable miners being forced out, but from miners actively shifting to more lucrative alternative uses.
Luke Gromen, founder and CEO of Forest For The Trees, summed it up succinctly: "AI is sucking all the oxygen out of the room, and Bitcoin is the casualty."
How Much Has the Hashprice Bottom Squeezed Miner Profit Margins?
Hashprice is the core metric for miner economic pressure. After peaking at around $63 per PH/s/day in July 2025, it declined further in Q1 2026 to the $28–$30 per PH/s/day range. As of June 7, 2026, the Hashprice of about $28.26 per PH/s is well below the threshold most miners need to achieve positive cash flow.
CoinShares estimated in its Q1 2026 mining report that at a Hashprice of roughly $30 per PH/s/day, miners operating below S19 XP efficiency and paying $0.06/kWh or more for electricity are running at a loss. The report suggests that under these conditions, about 15% to 20% of global mining capacity is operating unprofitably.
Another key trend is the changing cost structure. In Q4 2025, the weighted average cash cost for public miners to produce one Bitcoin rose to approximately $79,995. Meanwhile, the Bitcoin price during the same period had retreated from its all-time high of $124,500, and this divergence was directly reflected in public miners’ balance sheets: their collective Bitcoin holdings dropped by over 15,000 BTC from peak levels.
Additionally, miners’ capital structures are evolving. IREN holds about $3.7 billion in convertible notes, TeraWulf has roughly $5.7 billion in total debt, and Cipher Digital issued $1.7 billion in senior secured notes. Debt leverage amplifies the pressure during downturns, accelerating the exit decisions for highly leveraged miners.
Can the Expected 11% Difficulty Adjustment Relieve Miner Profit Squeeze?
Bitcoin’s difficulty adjustment is the network’s automatic balancing mechanism: when block times exceed the 10-minute target due to declining hash rate, the difficulty is automatically reduced in the next cycle. As of June 8, 2026, the average block interval is about 11.2 minutes, well above target. Based on current block times, the next difficulty adjustment is expected in mid-June 2026, with difficulty dropping from 138.96 T by about 11% to around 123.88 T.
A lower difficulty means remaining miners will see increased per-hash output: the same hash rate will earn a larger share of block rewards after the adjustment. For miners still active on the network, this offers a temporary profit boost. However, two key constraints remain:
First, while an 11% difficulty drop is significant, hash rate had already fallen by 145 EH/s before this adjustment. From the peak of nearly 1,160 EH/s in October 2025, the current 885 EH/s is down about 25%. The difficulty adjustment can’t fully offset the revenue base lost to such a large hash rate exit.
Second, the extent of profit recovery fundamentally depends on the Bitcoin price. At the current Hashprice of about $28 per PH/s/day, an 11% difficulty reduction could lift per-unit revenue to about $31 per PH/s/day. While this may ease some miners’ profit pressure, it remains far below the $63 per PH/s/day seen in July 2025. Historically, when both Hashprice and network difficulty deviate from long-term averages, a single difficulty adjustment is rarely enough to fundamentally change miners’ economics.
Why Is the Shift to AI Data Centers Accelerating Structural Hash Rate Loss?
The pivot of public miners toward AI data centers is a major trend in mining from 2025 to 2026. The underlying economic logic is that miners’ core assets—cheap power access, substations, industrial parks, and long-term power purchase agreements—are exactly the scarce resources needed for AI data center expansion.
Industry data shows that by early 2026, public miners had announced over $70 billion in AI and high-performance computing contracts. Hut 8 signed a 15-year, $9.8 billion lease for a 352 MW data center in Texas. TeraWulf secured $12.8 billion in AI contract revenue. Core Scientific raised $208 million in Q1 2026 by selling Bitcoin to accelerate its shift to AI and high-performance computing infrastructure; the company also launched a $3.3 billion debt financing plan to fully transition to AI data center operations. In May 2026, IREN completed a $3 billion convertible note issuance to fund its move from pure Bitcoin mining to AI data center operations.
This transformation structurally impacts hash rate because AI data center contracts typically use 10- to 15-year leases, with tenants requiring stable power and service-level agreements. This is fundamentally different from Bitcoin mining’s interruptible, flexible load management. Once power capacity is locked into long-term AI hosting, even if Bitcoin prices rebound, shifting that capacity back to mining is no longer economically rational. As a result, a significant portion of the 145 EH/s may have permanently left the Bitcoin network, rather than entering a "shutdown—difficulty adjustment—restart" cycle.
It’s also worth noting that the AI pivot isn’t risk-free. Building AI data centers costs far more than mining infrastructure ($8–15 million per MW versus $0.7–1 million per MW for mining). Miners relying on debt to fund this transition still face repayment risk—it’s just moved from mining to hosting.
Does the "Hash Rate Bear Market" End the Assumption That Hash Rate Only Rises?
The idea that "hash rate only goes up" has long been a core assumption in Bitcoin mining. This is based on two beliefs: that Bitcoin’s price will keep rising, attracting more hash rate, and that each halving cycle will eventually drive hash rate to new highs.
The 145 EH/s hash rate outflow is challenging that assumption. Zagury points out that current hash rate is down about 25% from its September 2025 peak. He also believes Bitcoin’s security remains robust, since the capital needed for a 51% attack is still extremely high. But the bigger long-term risk is a stagnant fee market—transaction fees now make up less than 1% of miner rewards, while block subsidies keep halving every four years.
From a broader perspective, whether the "hash rate bear market" ends the "hash rate only rises" assumption depends on two variables: first, whether AI demand continues to absorb power and hash rate supply previously used for mining; and second, whether, as Bitcoin’s market cap growth slows, per-hash revenue stabilizes or even declines over the long term. There are no definitive answers to these questions in current market data, but the 145 EH/s contraction has forced the market to reevaluate the validity of these assumptions.
Notably, public miner stock performance has diverged from Bitcoin’s price. According to 10X Research, an index tracking mining companies’ stocks rose about 56% in the first five months of 2026, while Bitcoin fell roughly 17% in the same period. Capital markets are revaluing miners—not just as a leveraged play on Bitcoin’s price, but as "power and compute infrastructure operators." This shift in valuation framework itself provides a new challenge to the "hash rate only rises" narrative.
What Are the Implications of the 145 EH/s Contraction for Bitcoin Network Security and Market Structure?
The core safeguard for Bitcoin network security isn’t the absolute hash rate, but the marginal cost to attack the network. Dropping from 1,030 EH/s to 885 EH/s means the total hash rate required for a 51% attack is lower, but the absolute cost threshold remains extremely high. So, from a security margin perspective, there’s no systemic risk at this stage. However, the ongoing hash rate outflow is changing two key dimensions of Bitcoin’s market structure.
First is supply-side pressure. The 15,000 BTC collectively sold by public miners has been or is being absorbed by the market. Relative to total Bitcoin supply, this sell-off isn’t enough to single-handedly drive price trends, but its marginal impact on market sentiment and liquidity is significant—especially during price downturns, when forced or voluntary miner sales can reinforce self-fulfilling downward price cycles.
Second, based on Gate market data, as of June 11, 2026, Bitcoin’s price has dropped to its lowest range since February. In this environment, hash rate contraction is both a result of lower prices (miners exiting due to losses) and a potential amplifier (hash rate drops → difficulty adjusts downward → per-unit costs fall → some profit pressure is relieved). Still, the relief is limited—at the current Hashprice of about $28 per PH/s/day, even with an 11% difficulty cut, miner revenue per unit remains well below the second half of 2025 average. If Hashprice doesn’t recover to a sustainable profit range, further hash rate contraction can’t be ruled out.
From a network health standpoint, the difficulty adjustment mechanism provides an automatic brake on hash rate declines, and there have already been three consecutive negative adjustments from Q4 2025 to Q1 2026. The current expected 11% reduction is a relatively large adjustment—essentially a protocol-level reset of costs. But the long-term issue on the fee side remains: if transaction fees don’t rise significantly in the coming years to offset the ongoing reduction in block subsidies, Bitcoin’s security budget will rely more on price cycles and miner stratification than on network effects.
Conclusion
The 145 EH/s hash rate contraction from late May to early June 2026 was driven by three main factors: Hashprice dropping to around $28 per PH/s/day intensified losses for high-cost miners; the expected 11% difficulty adjustment may provide a temporary cost buffer for remaining miners; and the AI data center business’s long-term lockup of power and infrastructure is fundamentally changing hash rate elasticity. Zagury’s "hash rate bear market" is more a correction to the "hash rate only rises" inertia than a threat to network security. The real long-term risk remains whether the transaction fee market can gradually take over as the main source of security budget as block subsidies keep halving. Miners’ pivot to AI is accelerating this structural narrative shift, with long-term effects likely to far outweigh the headline hash rate contraction.
FAQ
Q: What is a "hash rate bear market"?
A "hash rate bear market" is a term coined by Elektron Energy CEO Rapha Zagury, referring to a sustained hash rate contraction driven by market forces rather than network design issues. In this case, Bitcoin’s network hash rate has fallen about 25% from its September 2025 peak, marking a structural break in the long-term upward trend.
Q: Does a lower hash rate mean Bitcoin network security is compromised?
A lower hash rate reduces the cost of acquiring enough hardware to attack the network, but since the absolute cost threshold remains extremely high, the current 885 EH/s level does not pose a systemic security risk. Zagury also notes that the capital required for a 51% attack remains economically unfeasible in today’s environment.
Q: How much profit relief can miners expect from the difficulty adjustment?
The roughly 11% difficulty reduction expected in mid-June 2026 could boost per-hash revenue by a similar margin (assuming Hashprice stays constant). However, given Hashprice is down about 55% from July 2025, a single difficulty adjustment offers only limited relief and cannot fundamentally reverse the structural profit squeeze on miners.
Q: Is the trend of miners shifting to AI data centers reversible?
AI data center contracts typically use 10- to 15-year leases, with tenants demanding strict power reliability. Once power capacity is locked into AI hosting, shifting it back to mining is no longer economically rational. Therefore, a significant portion of the current hash rate contraction may be structural and irreversible.
Q: Are there new risks for miners pivoting to AI?
Yes. The per-MW construction cost for AI data centers ($8–15 million) is much higher than for mining infrastructure ($0.7–1 million per MW). Miners relying on debt to fund the transition face repayment risk—it’s just shifted from mining to hosting. AI data center hosting margins are also subject to supply-demand dynamics and regulatory factors.
Q: How can I track developments in the hash rate bear market?
Monitor three key metrics: whether Hashprice recovers above $35 per PH/s/day; whether consecutive difficulty adjustments indicate hash rate stabilizing; and how miners’ quarterly reports show the revenue split between mining and AI hosting. Together, these data points reveal whether hash rate contraction is a result of strategic choices or forced exits.
