CoinShares' Q1 report shows 15 to 20 per cent of the global mining fleet now operating below breakeven, with three consecutive difficulty reductions marking the first sustained capitulation since July 2022.
Bitcoin's network hashrate posted its first Q1 decline in six years, dropping roughly 10 per cent from its Q4 peak to hover near 1 zettahash per second as miners running older hardware switched off their rigs in the face of economics that no longer work.
CoinShares' Q1 2026 mining report quantifies the damage. Hash price — the standard measure of mining revenue per unit of computational power — fell to approximately $28 per petahash per second per day by early March, a five-year low that pushed an estimated 15 to 20 per cent of the global fleet below breakeven. The roughly 252 exahashes per second that went dark represents enough computational power to have secured the entire Bitcoin network as recently as 2023.
Three consecutive mining difficulty reductions confirmed the capitulation. The last time difficulty fell three adjustments in a row was July 2022, when the collapse of Terra/Luna and Three Arrows Capital was reverberating through crypto markets and Chinese miners were still relocating after the country's ban. This time the cause is simpler: bitcoin's price dropped roughly 50 per cent from its October 2025 peak of $124,000 to a February low near $65,000, and the April 2024 halving — which cut the block reward from 6.25 BTC to 3.125 BTC — had already halved the revenue side of the equation.
The industry average operating breakeven sits at approximately $77,000, according to CoinShares. Miners running the latest-generation Antminer S21 XP hardware, with an efficiency of roughly 15 joules per terahash, can remain profitable down to approximately $55,000. But fleets using machines rated at 25 joules per terahash or worse — which still account for a significant share of the network — begin haemorrhaging cash the moment bitcoin drops below $75,000. At current prices around $75,400, those operators face a choice between shutting down and selling at a loss.
The response has accelerated a consolidation that was already underway. CoinShares estimates that by year-end, 85 per cent of global hashrate will be controlled by just 12 publicly traded companies or sovereign wealth funds. Smaller operators, many of whom entered the market during the 2021 bull run with secondhand equipment and cheap power contracts that have since expired, are being absorbed or shuttered. The efficiency gap between the best and worst fleets — roughly 15 joules per terahash versus 25 or more — is wide enough that acquiring capacity is often cheaper than upgrading it.
The pivot to artificial intelligence is part of the story. Bitcoin miners are on track to earn more from AI than from bitcoin by year-end, and the companies making that transition — Core Scientific, Iris Energy, Hut 8 — have seen their share prices decouple from bitcoin's. Those that remain pure-play miners are bearing the full weight of the downturn; Marathon Digital's stock is down 40 per cent since October.
The difficulty adjustment mechanism means the network eventually self-corrects. As unprofitable miners switch off, difficulty falls, making mining more profitable for the survivors, which stabilises hashrate at a new equilibrium. That cycle is working as designed; the most recent difficulty reduction, a 7.76 per cent drop to 133.79 trillion, was the largest single adjustment in over a year. The network's security has not been meaningfully compromised — 1 zettahash is still an extraordinary amount of computational power — but the concentration of that power in fewer hands raises questions about decentralisation that Bitcoin's original design was supposed to prevent.
CoinShares forecasts hashrate reaching 1.8 zettahashes by the end of 2026 and 2 zettahashes by March 2027, but those projections assume bitcoin recovers to $100,000 by year-end. At current prices, the more likely trajectory is further consolidation, further difficulty reductions, and a mining industry that looks less like a distributed network and more like a dozen industrial-scale operations competing on energy costs and chip efficiency. The difficulty at the last adjustment was 133.79 trillion; the number of entities that matter in setting it shrinks with every quarter.
