A sharp drop in the Bitcoin blockchain’s hashrate, down 10% on Sunday during this week’s US winter storm, offers a real-time stress test of a concern long flagged by researchers: Mining centralization has turned local infrastructure failure into system-level risks.
Hashrate is the amount of available computing power to process transactions required to keep the Bitcoin blockchain running at any given time. When it drops sharply, the network has less room to process transactions, increasing the risk of delays before the difficulty resets.
While the Bitcoin blockchain continued to function through the storm — with only 10% of the blockchain’s hashrate going offline — a growing body of academic research suggests that its exposure to such events has grown.
In a working paper from 2021, 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, showing how concentrated mining can turn local blackouts into network-wide disruptions.
This research helps contextualize why increasing concentration in BTC mining matters as block production is increasingly aggregated 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 local shocks.
Over the past two years, the top two mining pools have often controlled more than 50% of Bitcoin’s hashrate, while the top six pools have consistently accounted for around 80% to 90% of all blocks, leaving much of the network’s transaction processing in the hands of a few operators.
So far, markets appear unfazed as BTC barely moved on the day, but the episode highlights how the Bitcoin blockchain’s growing mining concentration can turn physical infrastructure failures into system-level stress without immediately showing up in price.
