Twenty One Capital CEO Raphael Zagury said Bitcoin is experiencing its first “hashrate bear market” as network computing power remains below its late 2025 record and listed mining companies redirect infrastructure investment toward artificial intelligence.

Zagury presented the argument at Bitcoin Asia in Hong Kong on Aug. 28. Twenty One Capital subsequently filed the prepared transcript with the U.S. Securities and Exchange Commission.

Bitcoin hashrate approached 1.3 zettahashes per second late last year before entering a prolonged decline, Zagury said. His presentation materials calculated a drawdown of approximately 22% to 24% from the peak.

“Hashrate bear market” is Zagury’s description of the current cycle rather than an official Bitcoin network classification. It refers to the unusually long period during which estimated computing power has failed to return to its previous record.

Bitcoin hashrate decline differs from the 2021 shock

Bitcoin’s hashrate measures the estimated computing power miners contribute to securing the network and competing for block rewards. A higher figure generally means more machines or more efficient equipment is operating.

Zagury contrasted the current decline with the disruption caused by China’s 2021 mining ban. Hashrate fell rapidly during that episode as companies shut down Chinese facilities, but recovered as machines moved to North America, Central Asia and other regions.

The present cycle has developed more gradually. Rather than relocating the same machines, operators are reconsidering whether new electricity and data center capacity should be allocated to Bitcoin mining at all.

“This has been the longest period that we’ve seen from an all-time high until recovery,” Zagury said.

Network estimates vary because Bitcoin does not publish an exact count of active machines. Analysts infer hashrate from block production rates and mining difficulty, which means daily readings can fluctuate sharply.

CoinWarz estimated hashrate at about 829 exahashes per second on Sept. 2, after readings moved above one zettahash during several days in late August. Longer moving averages provide a clearer measure than daily estimates.

Previous analysis found that Bitcoin mining difficulty had fallen 19.9% from its November peak by late July. Hashrate had remained in a downward trend for approximately 287 days, according to Bitcoin Magazine Pro data cited in that report.

AI gives miners another use for scarce power

Bitcoin miners and AI data centers compete for several of the same resources. Both require large power connections, cooling systems, land, data center buildings and access to capital.

AI facilities require different chips, networking equipment and construction standards from Bitcoin mines. Converting a mining site is therefore more complicated than replacing ASIC machines with graphics processors. Sites with secured power and fiber access can nevertheless provide a starting point for high performance computing development.

Zagury said this option changes the hashrate cycle because miners can now direct capital toward another computing market instead of automatically expanding their Bitcoin fleets.

“If you look at the public mining companies out there, there really isn’t anybody staying the course to mine Bitcoin at scale,” he said. “Pretty much everybody is leaving the industry right now.”

The statement describes a broad trend but should not be read literally. MARA, CleanSpark, Riot, Bitdeer and other publicly traded companies continue operating large Bitcoin mining fleets, even as some explore or build AI infrastructure.

The shift is most advanced at companies such as TeraWulf, IREN, Core Scientific, HIVE and Cipher. TeraWulf reported $21 million in AI and high performance computing hosting revenue during the first quarter, exceeding its Bitcoin mining revenue for the first time as its AI business became its largest revenue source.

Cipher has also obtained a $200 million revolving credit facility to finance its expansion into long-term AI data center contracts.

Low cost miners could gain network share

Zagury rejected the idea that Bitcoin mining is inherently a poor business. He argued that profitability depends on where an operator sits on the industry’s cost curve.

A miner with efficient equipment and low electricity costs can remain profitable under conditions that force a higher-cost competitor to shut down. Capital structure also matters because heavy debt and short repayment schedules can create pressure even when a facility remains operationally competitive.

Hash price, which measures expected miner revenue for a unit of computing power, remains low compared with historical levels. That puts pressure on operators using older machines or expensive electricity.

However, declining network hashrate can benefit miners that remain active. Bitcoin adjusts mining difficulty every 2,016 blocks, or approximately every two weeks, to keep average block production close to ten minutes.

When computing power leaves the network, a downward difficulty adjustment can make it easier for remaining miners to find blocks. Each surviving operator can then control a larger share of the network without adding machines.

“The beautiful thing about Bitcoin mining being in a bear market of hashrate is that, for those that stay around, they naturally get a higher share of the market,” Zagury said.

That benefit does not guarantee higher profits. Revenue still depends on Bitcoin’s price, transaction fees, electricity costs, equipment efficiency and the amount of competing hashrate.

Bitcoin price must outpace hashrate growth

Zagury said mining has the best chance of outperforming Bitcoin when the asset’s price increases faster than network hashrate.

If Bitcoin rises by 50% while hashrate remains flat, a miner’s revenue can increase without an equivalent rise in competition. If computing power grows faster than Bitcoin’s price, each operator’s network share and revenue per machine can decline.

Zagury recommended buying Bitcoin directly before investing in mining for someone allocating only a small amount of capital. He said investors considering larger, diversified allocations could combine Bitcoin with mining exposure.

“If you only have $1, buy Bitcoin first,” Zagury said. “I think that’s the best way to express your view.”

His position reflects Twenty One Capital’s stated approach of measuring potential investments against Bitcoin. The Tether-backed company treats the cryptocurrency as its main benchmark and argues that an operating business must justify its additional risks by offering a credible path to outperforming BTC.

Mining companies face construction, electricity, equipment, management and financing risks that do not arise from holding a spot Bitcoin exchange-traded fund. They can also offer operating leverage when Bitcoin rises faster than their costs and network competition.

Energy flexibility remains mining’s main advantage

Zagury also defended Bitcoin mining against criticism that it wastes electricity. He argued that energy use supports economic development and that mining offers a flexible source of demand.

ASIC machines can shut down and restart faster than heavy industrial facilities. Miners can therefore reduce consumption when electricity demand rises and resume operations when unused capacity becomes available.

The ability to curtail operations has led miners to participate in grid stabilization programs, particularly in energy markets with variable renewable generation. Financial and environmental results depend on the underlying power source and the terms of each arrangement.

AI data centers generally require steadier power than Bitcoin mines because customer workloads cannot be interrupted as easily. Bitcoin mining may therefore retain a role at sites where electricity is abundant but unreliable or cannot be transmitted economically.

Zagury said mining now provides four forms of optionality: flexible energy demand, increased network share when competitors leave, proximity to Bitcoin’s protocol and reusable data center infrastructure.

Whether miners capture those benefits will become clearer through upcoming difficulty adjustments and public company results. Filings will show how much capital miners direct toward new ASIC equipment compared with AI construction.

The sector’s direction is unlikely to be uniform. Some operators will retain Bitcoin mining, others will combine mining with AI hosting, and companies controlling the most attractive power sites may shift more aggressively toward high performance computing.

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The Monetary Authority of Singapore (MAS) has moved to reconsider a key element of its stablecoin stance from 2023, launching a public consultation on proposed amendments to the Payment Services Act (PSA) that could allow certain stablecoins issued with foreign partners to fall under Singapore’s regulatory framework.

According to MAS, the consultation—opened Tuesday—also reflects policy developments since 2023 and introduces additional safeguards for issuers seeking to market tokens as “MAS-regulated stablecoins.” MAS is also evaluating whether a limited set of foreign-issued stablecoins, supervised under comparable overseas regimes, could be recognized for specific cross-border wholesale uses.

Key takeaways

• MAS is consulting on PSA amendments that would translate its 2023 stablecoin framework into law, with conditions for “MAS-regulated stablecoins.”
• One proposal would allow stablecoins jointly issued by a Singapore issuer and a foreign issuer to qualify—if risks are sufficiently mitigated.
• MAS is also considering recognition of a limited number of foreign-issued stablecoins regulated under comparable frameworks for cross-border wholesale transactions.
• The consultation revisits MAS’s earlier requirement that qualifying stablecoins be issued solely in Singapore, citing prior concerns around regulatory equivalence and tracing commingled reserves.
• Public comments are open until Oct. 16.

From a “Singapore-only” rule to a more flexible model

MAS’s consultation effectively revisits its 2023 position that stablecoins eligible for its regulatory framework had to be issued solely in Singapore. In 2023, MAS finalized a stablecoin regulatory framework for single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a G10 currency.

MAS said at the time that expanding eligibility beyond Singapore raised practical difficulties—particularly around establishing regulatory equivalence and cooperation with other jurisdictions. The regulator also pointed to technical issues related to tracing where commingled stablecoins originated, as well as determining whether overseas reserves would be sufficient to meet redemption requests.

Now, MAS is asking for input on approaches that could reduce those earlier barriers while still keeping the core objective of regulated redemption and reserve-backed stability.

How “MAS-regulated stablecoins” could work with foreign issuers

Under one of MAS’s main proposals, stablecoins jointly issued by a Singapore issuer and a foreign issuer could be brought within the PSA framework and labeled “MAS-regulated stablecoins,” provided that MAS determines the associated risks are sufficiently mitigated.

The regulator frames the broader consultation around implementing the 2023 framework through legislative amendments to the PSA, Singapore’s main law governing payment services and operators.

MAS’s requirements for issuers would cover reserve-backed value stability, capital arrangements, and redemption mechanisms at par. The proposals also include issuer disclosure requirements and restrict branding: only issuers licensed under the framework would be able to market themselves as “MAS-regulated stablecoin issuers” and describe their tokens as “MAS-regulated stablecoins.”

MAS also proposes additional controls that focus on resilience and governance. Issuers would be prohibited from paying interest on regulated stablecoins. They would also need to conduct stress tests and maintain recovery and orderly wind-down plans.

To protect customers, MAS proposes safeguards covering customer money received before the corresponding stablecoins are issued. MAS also indicates that stablecoins outside the dedicated framework would continue to be treated as digital payment tokens under existing Singapore rules.

Recognition of certain foreign-issued stablecoins

Beyond jointly issued tokens, MAS is also considering whether to recognize a limited number of foreign-issued stablecoins that are regulated under comparable overseas frameworks.

In MAS’s description of the idea, the motivation for recognition is tied to practical utility: such tokens could be used for cross-border wholesale transactions. However, MAS’s consultation suggests it is not moving toward open-ended endorsement; rather, it is assessing a constrained approach, limiting recognition to a small set of stablecoins that meet standards similar to those expected under MAS oversight.

Why MAS’s shift matters for markets and compliance

For stablecoin issuers and liquidity providers, MAS’s consultation signals a willingness to accommodate real-world issuance structures—particularly where reserve management, issuance operations, or distribution links may involve multiple jurisdictions. Under the earlier 2023 framework, firms faced a simpler but narrower pathway: eligible stablecoins had to be issued solely in Singapore.

By introducing the possibility of qualifying joint issuance and conditional recognition of certain foreign-issued stablecoins, MAS is effectively balancing two competing realities: the need for strong redemption and reserve oversight, and the operational fact that cross-border settlement increasingly relies on interoperable, internationally used digital dollar and G10-pegged instruments.

At the same time, MAS is signaling that flexibility will come with tighter issuer obligations—reserve and capital requirements, stress testing, and structured wind-down planning—along with limits on marketing claims. The consultation’s focus on legal labeling (“MAS-regulated stablecoins”) also points to an emphasis on consumer clarity, not just technical compliance.

Next steps for MAS and the industry

MAS is accepting public comments on the consultation until Oct. 16, and the proposals’ details will be closely watched by issuers planning Singapore-related stablecoin product roadmaps—especially those considering cross-border distribution, joint issuance, or reserve arrangements involving foreign entities.

US-listed spot Bitcoin exchange-traded funds (ETFs) capped their best month of 2026 alongside Bitcoin’s biggest monthly gain since November 2024.

Bitcoin ETFs attracted $3.52 billion in net inflows in August, their highest monthly total of 2026 and a sharp increase from just $172 million in inflows in July, according to SoSoValue data.

Bitcoin (BTC) gained about 25% in August, its strongest monthly performance since a 37.29% rally in November 2024, according to CoinGlass.

The August momentum quickly gave way to a weaker start to September, as ETF flows turned negative and Bitcoin briefly fell below $77,000.

August cuts year-to-date outflows by 66% to $1.77B

August’s $3.52 billion in Bitcoin ETF inflows cut year-to-date net outflows by roughly 66%, from $5.29 billion to $1.77 billion.

The biggest monthly outflows came in June at $4.51 billion, followed by $2.43 billion in May and $1.61 billion in January, according to SoSoValue data.

Monthly flows into US spot Bitcoin ETFs in 2026. Source: SoSoValue

The funds recorded net inflows on 16 of 21 trading days in August, including nine consecutive sessions from Aug. 17 through Aug. 27.

Total net assets rose to $99.61 billion at the end of August from $76.29 billion at the end of July, an increase of about 31%. Monthly trading volume climbed nearly 49% to $58.63 billion from $39.37 billion.

September starts with $236M in Bitcoin ETF outflows

US spot Bitcoin ETFs started September with $236.46 million in net outflows on Tuesday, reversing the $216.70 million in net inflows recorded on Monday. The withdrawal marked the largest daily outflow since July 31, when the funds shed $265.37 million.

The reversal came as Bitcoin briefly fell below $77,000 on Tuesday after trading above $80,000 in late August, according to CoinGecko.

Related: Strategy buys $370M Bitcoin in first corporate purchase since June

Ether and XRP ETFs remained in positive territory on Tuesday. Spot Ether (ETH) ETFs attracted around $11 million on Tuesday, while spot XRP (XRP) ETFs drew $14.4 million.

August pushed Ether ETFs into positive territory for 2026, with $732 million in year-to-date net inflows after they ended July about $1.12 billion in the red.

XRP ETFs reached $502 million in year-to-date net inflows, up about 46% from $343 million at the end of July.

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Strategy CEO Phong Le defended the company’s decision to sell Bitcoin near $60,000 before resuming purchases around $80,000, arguing that its treasury trades depend on capital costs rather than Bitcoin’s market price.

Speaking on Bloomberg Crypto on Sept. 1, Le said the earlier sales and the latest purchase were both appropriate because Strategy’s financing conditions had changed between the transactions.

Strategy purchased 4,603 BTC for $369.7 million between Aug. 24 and Aug. 30 at an average price of $80,318, according to an Aug. 31 regulatory filing.

The purchase lifted its holdings to 845,050 BTC, acquired for approximately $63.73 billion at an average cost of $75,412 per coin.

Strategy links Bitcoin trades to capital costs

Le said Strategy does not decide whether to buy or sell Bitcoin solely by comparing the cryptocurrency’s current price with past levels.

Instead, management considers the cost of raising capital and the return it expects from deploying that capital. If Strategy can issue common shares at a premium to the value of its assets, it may use the proceeds to buy Bitcoin while increasing Bitcoin exposure on a per-share basis.

“We don’t buy or sell Bitcoin based on the price of Bitcoin,” Le said. “We buy or sell based on our cost of capital.”

The position explains why Strategy considered selling Bitcoin between approximately $60,000 and $65,000 reasonable while later paying more than $80,000. The transactions occurred under different balance sheet and financing conditions.

Le said issuing MSTR shares had become attractive again because the stock was trading at a premium. Strategy sold approximately $602.8 million of common shares during the week that ended Aug. 30, using part of the proceeds for its Bitcoin purchase.

The company also increased its general USD Cash pool by $29 million and spent approximately $152 million repurchasing STRC preferred shares below their $100 stated amount.

Strategy’s return to Bitcoin purchases after a two-month pause was therefore part of a broader capital allocation decision rather than a directional call that Bitcoin would rise from $80,000.

Bitcoin sales funded financial obligations

Le said Strategy sold roughly 7,000 BTC during its balance sheet restructuring, describing the amount as “minuscule” relative to its total holdings.

Strategy’s public Bitcoin ledger records sales of 2,225 BTC in early July, 1,638 BTC in early August and 1,690 BTC the following week. Those three disclosed reductions total 5,553 BTC.

The company had also reported selling approximately $218.4 million of Bitcoin earlier in 2026 to fund part of its preferred dividend obligations. Le’s interview figure appears to describe the broader period in rounded terms.

Le said selling Bitcoin to pay preferred dividends was “the right trade at the time.” Strategy had already committed to regular payments on its preferred securities and needed dollar liquidity to meet those obligations without relying entirely on new financing.

The sales represented a departure from Strategy’s earlier reputation as a company that only accumulated Bitcoin. Its board formally authorized a Bitcoin monetization program in June, allowing management to sell BTC to finance its dollar reserve, pay dividends and interest, repurchase securities or meet other approved obligations.

The policy permits up to $1.25 billion in Bitcoin sales to build the designated USD Reserve. It does not require Strategy to sell that amount.

Strategy’s first disclosed sale under its evolving treasury policy marked a transition toward active management of its Bitcoin holdings, rather than an abandonment of its accumulation strategy.

Strategy says net leverage has fallen to zero

Le said Strategy used the pause in Bitcoin purchases to strengthen its balance sheet. Over roughly two months, it increased dollar assets while reducing its net exposure to convertible debt.

The company reported $6.71 billion in USD assets as of Aug. 30. That amount comprised cash and other dollar-denominated holdings allocated across its designated reserve and general corporate liquidity.

Its convertible debt stood at approximately $6.75 billion. Strategy therefore reported net leverage of 0.0% because its company-defined calculation subtracts dollar assets from outstanding debt before comparing the balance with its Bitcoin reserve.

Net leverage of 0.0% does not mean Strategy has eliminated its legal debt or preferred stock obligations. The company continues to have convertible notes outstanding and must make preferred dividend payments.

The metric instead shows that its dollar assets nearly offset the principal value of its convertible debt. The calculation does not subtract all preferred stock claims.

Le described the balance sheet as a “fortress,” arguing that Strategy has no meaningful Bitcoin liquidation price under its current structure. The company’s debt is not secured directly by its Bitcoin in a way that would automatically force sales when BTC falls to a stated level.

That claim does not mean a prolonged Bitcoin decline would have no financial effect. Lower Bitcoin prices could reduce Strategy’s asset value, weaken its ability to issue shares at attractive prices and increase pressure from preferred dividends and other obligations.

Strategy adopts a two-way Bitcoin policy

Le said Strategy now operates a “two-way strategy.” It may sell Bitcoin when doing so improves its capital structure, even though it intends to remain a net accumulator over time.

The framework makes Bitcoin one component of Strategy’s financing system rather than an asset that can never be sold. Management can compare BTC sales with common equity issuance, preferred offerings, repurchases and cash usage.

Strategy’s June framework explains that common stock issuance can be accretive when MSTR trades above the company’s adjusted net asset value. Issuing shares below that level can dilute Bitcoin exposure per share.

Le said Strategy could continue purchasing Bitcoin at $90,000, $100,000 or $130,000 if the cost of capital makes those purchases attractive. Those levels were examples, not forecasts or confirmed purchase orders.

The company would also consider selling Bitcoin again if the proceeds were more valuable elsewhere in its capital structure. Le said price alone would not determine such a decision.

Strategy’s Aug. 31 purchase confirms that it has returned to accumulation after its restructuring period. It now controls slightly more than 4% of Bitcoin’s maximum 21 million supply.

The next update will depend on Strategy’s weekly capital markets activity. Further MSTR issuance at a premium could finance additional Bitcoin purchases, while weak equity demand or higher financing costs could slow accumulation or make another sale more economical.

Meanwhile, Le’s central argument was that the apparent contradiction between selling near $60,000 and buying near $80,000 disappears when the transactions are viewed through Strategy’s cost of capital.

The Bitcoin sales supplied dollars for preferred obligations and balance sheet restructuring. The later purchase used proceeds from common shares issued when management believed MSTR’s market premium made the transaction accretive.

Le said Strategy had strengthened its dollar position, reduced net leverage and retained flexibility to transact in both directions. He maintained that the company remains a long-term net buyer, but no longer treats Bitcoin sales as prohibited.

He also said future purchases could occur at much higher Bitcoin prices if Strategy can obtain capital on sufficiently attractive terms. The comments described a conditional financing framework rather than a Bitcoin price prediction.