The head of Twenty One Capital spoke at an industry conference. Rafael Zagury attended the Bitcoin Asia event in Hong Kong. The presentation took place on the Nakamoto Stage on August 28. The event was held at a major exhibition center in Hong Kong. The company disclosed the transcript to the Securities and Exchange Commission. The filing was submitted to the American regulator on August 31. The Bitcoin network is experiencing an unprecedented decline in total computational power. The current pullback period is the longest in history.
The accompanying slides specify the exact figures behind the drop in computational power. The all-time high hash rate was recorded on September 19 of last year. The network's metric reached 1,275 EH/s. At the time of the presentation, the network was above 900 EH/s. This corresponds to a decline of approximately 24%. It is the longest period without a new all-time high on record — a full ten years without an update. The annualized rate of hash rate decline stands at 20%. This figure is calculated over the past six calendar months.
Rafael Zagury separately addressed the 2021 downturn. At that time, the decline was caused by a complete ban on mining in China. The equipment was left without a home but remained fully profitable. Miners were quickly relocated to other regions of the world. The metric fell from 180 to 86. That collapse occurred in just 51 days. The hash rate recovered in approximately nine calendar months. The current decline is far more drawn out over time. The drop is driven exclusively by serious economic factors.
A significant portion of equipment is unprofitable at the current hash price. Capital is being redirected into artificial intelligence projects. Investors are actively funding high-performance computing systems. A quick relocation of capacity is no longer to be expected. Among public mining companies, almost no one is continuing to double down. Most players are gradually exiting this segment. Companies are pivoting to new opportunities in computing infrastructure. Energy capacity is being actively repurposed for the needs of neural networks. Zagury's estimates are based on data covering twelve months. Recovery now depends on the direction of investment capital. Investors are choosing between mining and infrastructure for neural networks.
The hash rate decline fits into a broader macroeconomic shift. The industry's capacity exhaustion cycle does not explain the full picture. Data centers for neural networks are signing long-term contracts with fixed revenue. Miners remain hostage to the volatile Bitcoin price. This capital asymmetry explains the rapid outflow of money. An analytical report from the Neopool mining pool offers an important forecast. By 2030, significant changes will take place. Between 30% and 50% of miners will change their business model. Large companies will transition to hybrid computing formats. Cheap electricity will become the critical threshold for survival. The cost per kilowatt must be below four cents. The current decline may represent the first phase of a structural transformation. The global energy market is set for a major transformation in the years ahead.
***
This material is prepared for informational purposes only and does not constitute financial advice or a recommendation.