A sharp decline in the Bitcoin blockchain’s hashrate, down 10% on Sunday amid this week’s U.S. winter storm, offers a real-time stress test of a concern long noted 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 necessary for the Bitcoin blockchain to function at any time. When it drops sharply, the network has less headroom to process transactions, increasing the risk of delays before the difficulty resets.
While the Bitcoin blockchain continued to operate despite the storm – as only 10% of the blockchain’s hashrate was taken 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 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, showing how concentrated mining can turn local power outages into grid-wide disruptions.
This research helps contextualize why the growing concentration in BTC mining matters, as block production is increasingly clustered among a handful of dominant pools.
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 around 80-90% of all blocks, leaving much of the network’s transaction processing in the hands of a few operators.
For now, markets appear unfazed, as BTC barely moved that day, but the episode shows how the growing mining focus of the Bitcoin blockchain can turn physical infrastructure failures into system-level stress without it immediately being reflected in price.
