Chamath: Bitcoin faces squeeze from prediction markets and AI

Venture capitalist Chamath Palihapitiya wrote on X that bitcoin bulls face pressure from two directions: speculative money moving into prediction markets and equities, and mining energy being redirected to artificial intelligence. He noted the network hashrate fell about 7.9% to roughly 908 exahashes per second and mining difficulty decreased about 5% to near 127.17 trillion on July 11.

On the liquidity side, prediction markets recorded a $10.8 billion week this summer as traders placed bets on IPOs, sporting events and geopolitical outcomes. Traders on a leading prediction platform assign about a 10% probability that bitcoin will reach $100,000 by Dec. 31, 2026 and about a 67% probability it will reach $70,000. Bitcoin traded near $64,000 at the time of the comments.

On the energy side, the decline in hashrate and the difficulty adjustment reflected miners taking rigs and power offline. Some industry observers report miners are signing contracts to provide computing capacity for AI and high-performance computing tasks. One analyst projected that demand for such capacity could peak around 2028.

Coinbase CEO Brian Armstrong pushed back in a post, writing that the amount of hash power or energy used for mining does not determine bitcoin’s price and noting the protocol’s difficulty automatically adjusts when machines go offline to keep block production steady.

Palihapitiya was an early bitcoin advocate who previously recommended allocating 1% of net worth to the asset and at one point proposed a long-term price target of $240,000. He has also raised concerns about bitcoin’s suitability as a central-bank reserve because of transaction traceability and has warned that unchecked corporate spending on AI could erode earnings.

Near-term developments to watch include upcoming difficulty adjustments, the pace at which miners finalize AI and computing contracts, and whether prediction-market volumes continue to grow.