In the early 1500s, European navigators faced a blank space on their maps where the Atlantic met the rest of the world. Today, Bitcoin mining finds itself in a similar uncharted territory, not because of monsters, but because of a fundamental shift in network dynamics that has no historical precedent.
Raphael Zagury, Chief Executive Officer of Elektron Energy, laid out this contrarian perspective during a fireside chat at Mining Disrupt Miami, held July 21–23, 2026. Zagury argued that the current bear market is not a signal to exit the industry, but rather an invitation for disciplined operators to consolidate their position. While many peers are exiting to pursue artificial intelligence and high-performance computing opportunities, Zagury sees the retreat of competitors as a direct benefit for those who remain.
The Dragon in the Uncharted Waters
The core of Zagury’s argument rests on the behavior of network hashrate. In previous bear markets, such as the period following the 2021 ban on mining in China, hashrate collapsed rapidly and then recovered gradually. The current cycle, however, presents a different picture. Zagury said that in 2021 hashrate went "down the elevator shaft" and then took the stairs back up. Since September, network hashrate has instead been declining gradually, which he described as exactly the opposite. He called it something never seen before in Bitcoin’s history.
This is definitely uncharted territory.
Raphael Zagury · 1:06
This shift challenges the standard models used by mining companies, which have historically assumed 50% year-over-year growth in network hashrate as a baseline. Zagury noted that at Elektron Energy, the team has been recalibrating their expectations.
Why the Old Mining Models Are Broken
Zagury addressed two common criticisms of Bitcoin mining: that it is an unprofitable business and that it wastes energy. He dismissed the first critique by comparing mining to other commodity industries, such as oil production. In any commodity market, success is determined by one’s position on the cost curve. A low-cost producer can survive price crashes that bankrupt high-cost competitors. Bitcoin is the purest form of commodity, where the protocol does not care about brand narrative or logo design, only about the ability to produce valid proofs of work.
He emphasized that capital structure is the decisive factor in survival. He said the miners that got into trouble were the ones overleveraging and buying expensive equipment at the top of the market. Conversely, those who positioned themselves on the left side of the cost curve with efficient, newer-generation ASICs are finding that the bear market clears the field of weaker competitors. This dynamic is particularly evident as many public miners have not renewed their fleets, focusing instead on pivoting to AI and HPC workloads.
Energy Is Transformed, Not Wasted
The second accusation, that mining wastes energy, prompted Zagury to share a personal anecdote from his time at Yale. In 2002, he participated in a sustainable development program in the middle of the Amazon rainforest. He described a remote village with no electricity, where the school had no lights and the forest took over at nightfall. Less energy, he said, means medicine without refrigeration and children unable to study at night.
Zagury argued that the concept of consuming energy is physically incorrect. Energy is never destroyed; it is only transformed. In the context of Bitcoin mining, electrical energy is transformed into a monetary asset. He pointed to data showing a strong correlation between energy consumption and GDP per capita, suggesting that increased energy use is often a marker of economic development rather than a problem to be solved. He also highlighted the flexibility of mining loads, which can act as a buyer of last resort for surplus energy and a seller of first resort by taking loads offline when the grid requires stability.
Energy is never consumed. Energy is transformed.
Raphael Zagury · 15:23
The Protocol's Built-in Reward for Survivors
A key mechanism that makes the current bear market favorable for surviving miners is the Bitcoin difficulty adjustment. Unlike traditional commodities, where increased production leads to price collapse, Bitcoin’s protocol adjusts the mining difficulty to maintain a constant block time. When miners leave the network, the difficulty decreases, making it easier for the remaining miners to find blocks. This creates a natural reward for those who stay in the game.
Zagury described this as a unique feature of the Bitcoin protocol that benefits contrarian investors. While competitors exit in panic, the remaining miners immediately see more revenue through the difficulty adjustment. He added that a downturn also opens opportunities in machine, ASIC and infrastructure acquisition.
So being a contrarian actually pays off because it's the competitors leave whoever stays is going to benefit from that.
Raphael Zagury · 20:16
Building a Berkshire for Bitcoin
Zagury said he had been announced the day before in a new role at Twenty One Capital, which he said is being built on five pillars: the company structure itself, profitable operating companies that add to the treasury, capital markets activity, mergers and acquisitions, and, longer term, a lending and credit platform.
Zagury drew a comparison between the traditional hedge fund model and the Berkshire Hathaway model. While hedge funds rely mostly on financial engineering, Berkshire Hathaway focuses on acquiring and holding profitable businesses. Twenty One Capital aims to follow the latter approach, using the cash flows from its operating companies to sustainably add to its Bitcoin holdings. He said the right benchmark is shareholder value measured in Bitcoin terms.
If you're not adding shareholder value measured in Bitcoin terms, there's no reason for the company to exist.
Raphael Zagury · 23:55
The Real Risk of 'Yield'
As he concluded his remarks, Zagury addressed the concept of yield in the Bitcoin ecosystem. He emphasized that Bitcoin itself produces no yield at the protocol level. The only way to earn new Bitcoin is through mining. Any other yield carries risk that comes from somewhere, whether liquidity, execution, dilution or credit.
Zagury urged the audience to be deliberate about the risks they take, noting that everyone takes risk every day and the point is to understand the risk you are taking.
There's no yield for sitting on your Bitcoin.
Raphael Zagury · 26:38