In September 1859, the Carrington Event occurred. It was the largest geomagnetic storm in recorded history to impact Earth. Telegraph operators received electrical shocks, and telegraph pylons sparked and failed. Simultaneously, after power supplies for the telegraph lines failed, telegrams could still be sent due to all the energy flowing through the lines from the geomagnetic storm.
How might Bitcoin be impacted if a geomagnetic storm of this level occurred today?
Geomagnetic storms are caused by solar flares, violent ejections of radiation and mass from the surface of the sun that travel at high speeds across the solar system. They are caused by powerful magnetic loops on the surface of the sun suddenly changing position, leaving a helical magnetic field unconnected to the surface of the sun. Radiation and mass accelerate rapidly along this field and eject out into space. The energy released by a solar flare is more than enough to incinerate the planet Earth, if it were close enough to the sun. Fortunately, we are 93 million miles away.
The Earth has its own magnetic field, like the sun, and when a solar flare’s magnetic field impacts the Earth it causes sudden changes in Earth’s magnetic field. The most noticeable effect from this is Aurora Borealis, caused by Earth’s magnetic field being compressed and magnetic field lines connecting down through the surface rather than staying out in space. This causes highly charged particles to flow along the field down into Earth’s atmosphere, and when they interact with the atmosphere they react with gases which then emit various colors of light. During the Carrington Event, Aurora Borealis was observed as far south as Cuba and Hawaii, whereas usually it is only observed in polar areas like Alaska or Norway.
The change in Earth’s geomagnetic field generates electrical currents in conductors, even the ground begins to flow with electricity. Power lines and internet cables, especially the long ones that span across continents, would have massive electrical currents from a geomagnetic storm. This is because any moving magnetic field generates electrical currents in conductors according to basic physics.
This intense energy flowing through power lines and cables would destroy a vast amount of technological infrastructure. It is estimated that trillions of dollars of damage would occur if a Carrington Event occurred today, and hundreds of millions of people, if not a billion, would lose power across the world for weeks and even months. Internet service providers would go down for extended periods of time.
The first impact on Bitcoin is obvious. If there is no power and no internet, Bitcoin simply doesn’t work. If a geomagnetic storm like the Carrington Event occurred today, it could cause a majority of Bitcoin users to go offline. Global Bitcoin trading volume would plummet, and it wouldn’t function as a currency. Bitcoin users would be forced to use physical cash and this is one instance where physical cash has an advantage over Bitcoin.
Further, mining farms would be at extreme risk. The surge of power during a geomagnetic storm could fry the rigs in a mining farm causing devastating losses. Even if no rigs were damaged, the loss of power and internet for weeks or months could sink most mining operations. Bitcoin miners depend on mining round the clock to maintain profitability, and any interruption of that ruins the entire business model.
All sorts of computers would likely get fried as the first blast of energy surges through the power grid during a geomagnetic storm. This might cause people to lose Bitcoins if they stored the, only on that computer. This is a reason to make physical backups of private keys, or use a hardware wallet that is almost always disconnected from power and internet.
It is practically inevitable that a major solar flare like the Carrington Event will hit Earth one day, and Bitcoin users can be ready for it if properly educated. Since solar flares move at a speed far less than the speed of light, the Space Weather Prediction Center can issue forecasts several days ahead of time, so people can simply disconnect their computers and mining rigs if the big one is imminent.
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