Bitcoin Below 1 ZH/s: No AI Threat Here

Today, several crypto media outlets, following a statement by StandardHash CEO Leon Lyu, reported that Bitcoin's network hashrate has fallen below 1 ZH/s for the first time since mid-September. The news was immediately linked to mining power allegedly being redirected to AI workloads.

At first glance, this may look like a threat to Bitcoin from the AI industry. But is that really the case?

First, according to data from Mempool.space, the hashrate regularly dips below this level and then recovers. This is far from the first time it has happened.

Second, it is hard to imagine any Bitcoin mining hardware whose computing power could realistically be repurposed for AI tasks. ASIC miners are designed to do one thing only: brute-force hashes. They are useless for AI workloads.

So what is actually going on?

Mining is essentially one of the strategies for regularly acquiring Bitcoin. And right now, it is simply not the best time for that strategy.

• Some people buy Bitcoin gradually as the market price declines.
• Others ignore the price altogether and follow a classic DCA approach, buying the same dollar amount at regular intervals.
• And then there are miners, who do not buy at the market price at all. They acquire Bitcoin at cost. Miners continuously pay for electricity and, in return, receive a certain amount of Bitcoin that depends not on the current market price, but on their share of the total network hashrate.

Sometimes miners end up paying less for Bitcoin than they would on the open market, and sometimes more. In other words, mining can be more profitable than DCA at times, and less profitable at others. When the market price drops, it naturally becomes more attractive for some participants to buy Bitcoin directly on the market rather than acquire it through mining at a higher effective cost. That is why some mining capacity goes offline. People simply prefer to pay what Bitcoin sellers are asking, not what power companies are charging.

AI has nothing to do with this, and Bitcoin is not under threat. It remains the most reliable cryptocurrency, even with the hashrate below 1 ZH/s.

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