Demo:
<?php
function get_connection() {
    $con = new mysqli('localhost', 'root', '', 'Test');
    if(mysqli_connect_errno()) {
        die(mysqli_connect_error());
    }
    return $con;
}
function insert($con, $stmt, $un, $pw) {
    $stmt->bind_param('ss', $un, $pw);    
    $stmt->execute() or die(mysqli_error($con));
}
function setup() {
    $con = get_connection();
    $con->query('CREATE TABLE unpw (un VARCHAR(32), pw VARCHAR(256), PRIMARY KEY(un))') or die(mysqli_error($con));
    $stmt = $con->prepare('INSERT INTO unpw VALUES(?,?)') or die(mysqli_error($con));
    insert($con, $stmt, 'A', 'Not updated');
    insert($con, $stmt, 'B', 'Not updated');
    insert($con, $stmt, 'C', 'Not updated');
    insert($con, $stmt, 'D', 'Updated');
    $stmt->close();
    $con->close();
}
function dump() {
    $con = get_connection();
    $rs = $con->query('SELECT un,pw FROM unpw') or die(mysqli_error($con));
    while($row = $rs->fetch_array(MYSQLI_ASSOC)) {
        $un = $row['un'];
        $pw = $row['pw'];
        echo "$un $pw\r\n";
    }
    $con->close();
}
function teardown() {
    $con = get_connection();
    $con->query('DROP TABLE unpw') or die(mysqli_error($con));
    $con->close();
}
function superhash($pw) {
    return 'Updated';
}
function update() {
    $selcon = get_connection();
    $updcon = get_connection();
    $selstmt = $selcon->prepare('SELECT un,pw FROM unpw WHERE pw = ?') or die(mysqli_error($selcon));
    $updstmt = $updcon->prepare('UPDATE unpw SET pw = ? WHERE un = ?') or die(mysqli_error($updcon));
    $targetpw = 'Not updated'; 
    $selstmt->bind_param('s', $targetpw);
    $selstmt->execute() or die(mysqli_error($selcon));
    $rs = $selstmt->get_result();
    while($row = $rs->fetch_array(MYSQLI_ASSOC)) {
        $un = $row['un'];
        $pw = $row['pw'];
        $newpw = superhash($pw);
        $updstmt->bind_param('ss', $newpw, $un);
        $updstmt->execute() or die(mysqli_error($updcon));
    }
    $updstmt->close();
    $selstmt->close();
    $updcon->close();
    $selcon->close();
}
setup();
dump();
update();
dump();
teardown();
?>