What happens during a Bitcoin blackout?
Everyone knows it, no one likes it: power outages.
Everyone knows it, no one likes it: power outages. But what actually happens in the Bitcoin network when the power suddenly goes out?
Who hasn’t experienced that? A power outage. The lights go out, the TV is off, and the mobile phone stops charging. And even the internet can go down. Usually these outages are fixed within a few hours. The consequences only show up later: food in the freezer thaws and spoils.
But while damage from a power outage in the private sector is more or less manageable, the situation is different for large industries. The cryptocurrency Bitcoin, with its global network, is now one of them. Could a temporary power outage trigger the collapse of the crypto network?
Bitcoin Blackout: Does the hashrate fall?
A power outage is often local. Issues can pop up at a local distribution center or a storm can disrupt the grid. If supply collapsed in Germany, it would hardly be noticeable for Bitcoin. The situation is different in the U.S., Kazakhstan, or China. Because miners in these countries are particularly large, power outages would first show up in the hashrate.
In a sense, the hashrate shows at what point China banned mining bitcoins. In June 2021, about 34 percent of the global Bitcoin hashrate came from the Asian economic power, but despite the ban the current share is only 22 percent.
So for a short period the BTC protocol would be missing about a third of the entire mining network. Possible outages at other mining sites would have a similar effect on the Bitcoin network. The temporary dip was quickly overcome. In the meantime, the hashrate sits at a new high.
Plan ₿: Satellite and paper mining
When food thaws due to a power outage, one thing matters: an emergency plan. An improvised menu on the charcoal grill is an option. The mining network also needs to be prepared for a possible grid collapse. The crypto company Blockstream, founded by proof-of-work inventor Adam Back, has satellites in space. The six satellites broadcast the "Bitcoin blockchain free, 24/7, globally, protecting against network outages and reducing dependence on internet connections", per the site.
There is another, more rudimentary alternative: Bitcoin can be mined with a cryptographic algorithm called SHA-256. This algorithm can be run in emergencies by hand. A run takes about 17 minutes, corresponding to a theoretical hash rate of 0.67 hashes per day.
Global blackout
Scenario Anarchy: The world in chaos. Anyone who’s into apocalypse shows like "The Walking Dead" probably pictures it similarly. The remaining people would likely use gold or other rare precious metals as currency. Cash would be worthless. Bitcoin on the sidelines.
No matter how such a blackout started, there would eventually be a return to normality. The remaining people would trade, conduct research, and rebuild. If the Bitcoin network hadn’t faded into oblivion, miners could start validating blocks again. They would pick up exactly where the last miner left off before the crisis began. The advantage of Bitcoin as a peer-to-peer currency could also shine in such a scenario: No middleman between people in a transaction.
