More than half of the computing power of the Bitcoin network comes from three countries: the USA, Kazakhstan, and Russia. Now, crypto industry watchers are checking for any outages in the network as the latter state pursues war with Ukraine.
Currently, Bitcoin mining in Russia remains largely stable, but sanctions could change the account for miners who regularly come into contact with exchanges and other entities affiliated with the traditional financial system when exchanging BTC for cash.
According to the Cambridge Center for Alternative Finance, Russia was responsible for more than 11% of the global Bitcoin hash rate as of July 2021. Hash rate is a measure of the computing power allocated to the network as “miners” run software on specialized hardware.
Whit Gibbs, CEO of Compass Mining, said via Twitter that the company's own facilities in Russia are "well insulated from any geopolitical unrest."
If a large number of Bitcoin miners (as in China in the middle of last year) suddenly went offline, the network would become less decentralized and, as a result, slightly less secure, even though Bitcoin had not yet been hacked.
While mining started as a solo hobby (you can run Bitcoin software on a dedicated computer in your garage and earn some BTC), it has since grown into a multi-billionaire industry dominated by pools. This growth extends not only to Bitcoin, but also to Ethereum and other blockchains.
One of these teams, FlexPool, said today that it will prevent people with Russian IP addresses from participating in Ethereum mining. FlexPool provides more than 5% of hash power to the Ethereum network, which ranks fourth among all pools. The following expressions were used in the statement:
"We apologize to our Russian miners, most of you do not support the war. But it is you who support your nation. Without the people, Russia cannot function."