A sharp drop in the Bitcoin blockchain hashrate, down 10% on Sunday, during this week’s winter storm in the United States, is offering a real-time stress test of a concern long flagged by researchers: Mining centralization has turned local infrastructure failures into system-level risks.
Hashrate is the amount of computing power available to process the transactions needed to keep the Bitcoin blockchain up and running at any given time. When it drops sharply, the network has less space to process transactions, increasing the risk of delays before the difficulty is reset.
While the Bitcoin blockchain continued to operate during the storm (as only 10% of the blockchain’s hashrate went offline), a growing body of academic research suggests that its exposure to such events has increased.
In a 2021 working paper, Bitcoin Blackout: Proof of Work and the Risks of Mining CentralizationResearchers Philipp Scharnowski and Jiahua Shi found that a regional mining outage in China in 2021 led to longer block times, higher transaction fees, and degraded market quality, demonstrating how concentrated mining can turn local power failures into network-wide outages.
That research helps contextualize why the growing concentration in BTC mining matters, as block production has become increasingly clustered among a handful of dominant groups.
The Mining Centralization Index indicates that block production is now dominated by a small number of pools, reducing the network’s ability to absorb localized shocks.
Over the past two years, the top two mining pools have often controlled more than 50% of Bitcoin’s hash rate, while the top six pools have consistently accounted for roughly 80% to 90% of all blocks, leaving much of the network’s transaction processing in the hands of a few operators.
For now, markets seem unfazed, as BTC barely moved that day, but the episode highlights how the increasing mining concentration of the Bitcoin blockchain can turn physical infrastructure failures into system-level stress without immediately showing up in the price.
