Inside Bitcoin’s 24 hour race to survive a global internet blackout


Imagine the world’s internet backbone collapsing in a day.

Whether it’s due to human error, a catastrophic software bug, a rogue computer virus, or outright kinetic warfare, what happens to Bitcoin if the physical internet exchange hubs that connect the world suddenly go dark?

If Frankfurt, London, Virginia, Singapore, and Marseille were to go offline simultaneously, Bitcoin splits into three partitions.

Traffic across the Atlantic, the Mediterranean, and the main trans-Pacific routes would stall, leaving the Americas, Europe, Africa, the Middle East, and Asia and Oceania to view history separately until links are restored.

Block production continues inside each partition according to the hashrate that remains reachable.

With a 10-minute global target, a region that holds 45 percent of the hashrate produces roughly 2.7 blocks per hour, 35 percent produces about 2.1 blocks, and 20 percent produces about 1.2 blocks. Because nodes cannot exchange headers or transactions across partitions, each region advances a valid chain unaware of the others.

The result is a natural fork depth that grows with time and with the distribution of hashrate.

The partitioned cadence makes the divergence mechanical. Let’s assign rough hashrate averages to each region. For our modeling, we will use 45%, 35%, and 20% as our baseline distribution for the Americas, Asia and Oceania, and Europe and Africa, respectively.

An Americas cohort would add about six blocks every two hours, while Asia and Oceania would roughly add four to five blocks per hour, and Europe and Africa would add around two to three blocks per hour.

After one hour, the ledgers would already differ by double-digit blocks.

After half a day, gaps expand into the low hundreds.

After a full day, the chains differ by hundreds of blocks, which is beyond the range of routine reorganizations and forces services to treat regional confirmations as provisional only.

Potential reorg depth on the losing side rises linearly with isolation. Even short 50/50 splits create deep risk.
The potential reorganization depth on the losing side increases linearly with isolation. Even short 50/50 splits create deep risk.

Local mempools split immediately. A transaction broadcast in New York would not reach Singapore, so receivers outside the sender’s partition would see nothing until routes recover.

Within each partition, fee markets turn local. Users compete for limited blockspace against the regional hashrate, so fees rise fastest where hashrate is smallest and demand remains high.

Exchanges, payment processors, and custodial wallets typically pause withdrawals and on-chain settlement when confirmations lose global finality, and Lightning counterparties face uncertainty around commitment transactions that confirm on minority partitions.

When routes are returned, nodes initiate an automatic reconciliation.

Each node compares chains and reorganizes to the valid chain with the most cumulative work.

The practical costs fall into three buckets:

  1. The depth of reorganizations that invalidate minority-partition blocks.
  2. The work of rebroadcasting and reprioritizing transactions that were previously “confirmed” only on a losing branch.
  3. The operational checks that exchanges and custodians perform before reopening.

In a 24-hour fracture, dozens to hundreds of minority-partition blocks can be orphaned upon recovery, and services require additional hours to rebuild mempools, recalculate balances, and re-enable withdrawals.

Full economic normalization often lags protocol convergence because fiat rails, compliance checks, and channel management require human review.

The dynamics are easier to reason about by modeling isolation as a percentage of reachable hashrate rather than by counting hubs.

With 30 percent of the hashrate isolated, the minority side would add roughly 1.8 blocks per hour. This means that a standard six-confirmation payment within that partition becomes at risk after approximately three hours and twenty minutes, as those six blocks can be orphaned if the other 70 percent of the network builds a longer chain.

In a near 50/50 split, both partitions accumulate similar work, so even short splits create competing “confirmed” histories on both sides, and the outcome on reconnection becomes stochastic.

In an 80/20 split, the majority partition almost certainly wins; the smaller partition’s blocks, roughly 29 after a day, would be orphaned on merge, reversing many confirmed transactions in that region.

Reorg risk is the product of time and the smaller partition’s hashrate. The worst zone is long duration with near-equal splits.Reorg risk is the product of time and the smaller partition’s hashrate. The worst zone is long duration with near-equal splits.
Reorg risk is the product of time and the smaller partition’s hashrate. The worst zone is one with long duration and near-equal splits.

Resilience tools do exist, and they shape the real-world impact.

Satellite downlinks, high-frequency radio relays, delay-tolerant networking, mesh networks, and alternative transports, such as Tor bridges, can carry headers or minimal transaction flows across damaged routes.

These paths are narrow and high-latency, but even intermittent cross-partition propagation reduces fork depth by allowing some fraction of blocks and transactions to leak across.

Miner peering diversity, multi-homed exchange infrastructure, and the geographic spread of pools increase the likelihood that at least some work propagates globally through side channels, thereby limiting the depth and duration of reorganizations when the backbone returns.

The operational guidance for market participants during a network fracture is straightforward.

  • Halt cross-partition settlement, treat all confirmations as provisional, and harden fee estimation against local spikes.
  • Exchanges can switch to proof-of-reserve attestation without active withdrawals, extend confirmation thresholds to account for minority-partition risk, and publish deterministic policies that map isolation duration to the required number of confirmations.
  • Wallets can surface clear warnings about regional finality, disable automatic channel rebalancing, and queue time-sensitive payments for rebroadcast on recovery.
  • Miners should maintain diverse upstream connectivity and avoid manual overrides that deviate from standard longest-chain selection rules during the reconciliation process.

The protocol survives by design because nodes, once reconnected, converge on the chain with the most accumulated work.

The user experience does not fare as well during the split, since economic finality depends on consistent global propagation.

The most credible worst-case scenario under a day-long multi-hub outage is a temporary collapse in cross-border usability, a sharp and uneven fee shock, and deep reorganizations that invalidate regional confirmations.

When links are restored, software resolves the ledger deterministically, and services restore full functionality after operational checks.

The last step is reopening withdrawals and channels once balances and histories are coherent on the winning chain.

That’s the recoverable case, but what if the fracture never heals?

What would happen to Bitcoin during World War 3?

Now then, what if those backbone hubs I mentioned at the start never come back?

Well, in that dystopian scenario, Bitcoin, as we know it, does not reemerge.

You get permanent geographic partitions that behave like separate Bitcoin networks, sharing the same rules but no communication between them.

Each partition continues to mine, adjusts its difficulty on its own schedule, and develops its own economy, order books, and fee market. There is no mechanism to reconcile histories without restoring connectivity or coordinating a manual choice of a single chain.

Here is what that steady state looks like.

Consensus and difficulty

  • Until each partition reaches the next 2016-block retarget, block times run slow or fast according to the reachable hashrate. After the retarget, each partition re-centers around 10 minutes locally.
  • Using our approximated shares, the expected time to the first retarget is:
Partition Hashrate share Blocks/hour Blocks/day Days to 2016 blocks (first retarget)
Americas ~45% ~2.7 ~64.8 ~31 days
Asia/Oceania ~35% ~2.1 ~50.4 ~40 days
Europe/Africa/Middle East ~20% ~1.2 ~28.8 ~70 days

After that first retarget, each partition produces blocks at roughly 10 minutes, then continues halving and adjusting independently.

Without cross-ocean links, regions need 31, 40 and 70 days, respectively, to hit their first difficulty retarget.Without cross-ocean links, regions need 31, 40 and 70 days, respectively, to hit their first difficulty retarget.
Without cross-ocean links, regions need 31, 40, and 70 days, respectively, to hit their first difficulty retarget.

Halving dates diverge by wall-clock time because each region reaches halving heights at different speeds before its first retarget.

Supply and “what is BTC:” Fees, mempools, and payments

Inside each partition, the 21 million cap still applies per chain. Globally, the total number of coins across all partitions exceeds 21 million, as each chain continues to issue subsidies independently. Economically, this creates three incompatible BTC assets that share addresses and keys but have different UTXO sets.

Keys control coins on every partition simultaneously. If a user spends the same UTXO in two regions, both spends are valid on their respective local chains, resulting in permanent “split coins” with the same pre-split history and divergent post-split histories.

  • Mempools are local forever. Cross-partition payments do not propagate. Any attempt to pay someone in another partition never reaches them.
  • Fee markets settle into local equilibria. The smaller-hashrate partition tends to have tighter capacity during the long pre-retarget period, then normalizes after difficulty adjusts.
  • Lightning channels that span users across different partitions cannot be routed. HTLCs time out, peers publish commitments, and closures confirm only in the local partition. Cross-partition liquidity becomes stranded.

Security, markets, and infrastructure

Each partition’s security budget equals its local hashrate and fees. A region with 20 percent of pre-split hashrate has a lower absolute cost of attack than the global network did. Over time, miners may migrate toward the partitions with higher coin price and cheaper energy, changing the security profile again.

Without a path for headers between partitions, an attacker in one partition cannot overwrite the history in another; therefore, attacks are contained within a specific region.

  • Exchanges become regional. Tickers diverge. You effectively get BTC-A, BTC-E, and BTC-X prices, even if all refer to themselves as BTC locally.
  • Fiat on-ramps, custody, derivatives, and settlement rails specialize in regional chains. Index providers and data vendors have to choose one chain per venue or publish multiple composites.
  • Bridged assets and oracles that depended on global data feeds break or fork into regional versions.

Protocol rules remain the same unless a partition coordinates a change in the rule. Any upgrade adopted in one partition does not activate elsewhere, creating rule-set drift over time.

Pool software, explorers, and wallets run per-partition infrastructure. Multi-homed services cannot reconcile balances across chains without a manual policy.

Can the partitions ever reconcile without those hubs?

If no communication path is ever restored, protocol convergence is impossible. The only way back to a single ledger is through social and operational means, for example, a coordinated selection of one partition’s chain as canonical and the abandonment or replay of the others.

Given deep divergence after weeks, automatic reorg to a single history is not feasible.

Operational takeaway

We would have to treat a permanent fracture exactly like a hard fork with shared pre-split history. Manage keys so you can spend split coins safely, avoid accidental replay across partitions by using outputs that only exist in one region, and maintain separate accounting, pricing, and risk controls per partition.

Miners, exchanges, and custodians should select a home partition, publish chain identifiers, and document policies for deposits and withdrawals specific to each chain.

In short, if those hubs never return and no alternative paths bridge the gap, Bitcoin does not die; it becomes several independent Bitcoins that never rejoin.



Source link

Solana ETFs are outperforming Bitcoin: Is SOL siphoning BTC liquidity?



For six consecutive trading days, starting October 28, when Bitwise launched the BSOL US Solana ETF, it pulled in $284 million, while Bitcoin and Ethereum funds bled capital.

According to Farside Investors’ data, Bitcoin ETFs lost $1.7 billion over the same stretch. Ethereum products shed $473 million.

The divergence wasn’t subtle, and it arrived at a moment when macroeconomic headwinds, consisting of a hawkish Fed posture and a strengthening dollar, typically drain risk appetite across crypto.

Instead, the new Solana wrappers absorbed steady creations while the incumbents faced redemptions.

The question is whether this marks genuine allocator rotation or simply the front-loaded enthusiasm that accompanies any new ETF launch, amplified by a temporary risk-off swing that made Bitcoin and Ethereum look overextended.

The mechanics of a dislocation

Through Nov. 4, Bitcoin and Ethereum spot ETFs together posted roughly $797 million in single-day outflows as sentiment soured.

Meanwhile, Solana funds continued printing small but unbroken net creations. CoinShares’ weekly data for the period ending Oct. 31 tells the same story at the global ETP level.

Bitcoin products led outflows, while Solana took in about $421 million, its second-largest week on record, driven entirely by US launches.

Farside’s issuer-level tapes confirm the pattern across sessions. Bitcoin funds bled through multiple days into early November, while Ethereum flipped negative. Meanwhile, both US Solana ETFs have maintained positive flows every trading day since their debut.

These bits suggest that Solana’s ability to attract capital isn’t just noise.

Sustained redemptions in Bitcoin and Ethereum ETFs mechanically shrink their share of total crypto ETF assets under management and reduce daily primary-market demand for the underlying tokens.

Persistent creations in Solana ETFs tighten available float and deepen secondary liquidity in SOL.

If the flows cadence persists over weeks rather than days, index constructors, allocators, and market makers recalibrate exposures and inventory toward Solana, which tends to amplify relative performance in both directions.

Launch windows versus real demand.

Solana flows sit squarely in the classic new-product launch window, which routinely front-loads creations.

Farside’s dashboard shows substantial seed and conversion capital at launch, particularly for Grayscale’s GSOL. The first three days delivered unusually strong results before the pace decelerated.

If the post-launch run rate settles back toward low-single-digit millions per day while Bitcoin and Ethereum outflows slow as the macro tape stabilizes, the rotation narrative collapses into a launch artifact.

However, if US-traded Solana funds continue to absorb net creations after seed capital is exhausted, potentially four to six consecutive weeks of positive flows, while Bitcoin and Ethereum funds continue to leak due to macro jitters, the reweighting becomes durable.

CoinShares already attributes last week’s Solana strength to US ETF demand, rather than a single issuer’s anomaly.

That combination suggests genuine allocator rotation, not just launch mechanics disguised as strategy.

Eric Balchunas noted on Nov. 1 that BSOL led all crypto ETPs “by a country mile” in weekly flows with $417 million, ranking 16th in overall flows across all ETFs for the week. BSOL outperformed even BlackRock’s IBIT, which posted a rare off-week.

That’s distribution at work, but it’s also a signal that allocators with new mandates found room in their sleeves for Solana exposure without waiting for Bitcoin or Ethereum to stabilize first.

Who decides the endgame?

What to watch next is the post-launch steady state in Solana creations versus Bitcoin and Ethereum redemptions.

If Solana maintains positive net creations once seed flows dissipate and Bitcoin and Ethereum remain net negative on rolling weekly windows, treat the move as structural.

If Solana creations taper to flat and the incumbents stabilize, this was a launch-window blip amplified by a risk-off week that made everything feel more decisive than it was.

The stakes are distribution defaults and liquidity gravity. Solana doesn’t need to overtake Bitcoin or Ethereum in total assets to win this round. It just needs to prove that a well-timed ETF launch can attract capital even when macroeconomic conditions favor retreat.

If that holds, the lesson for the next altcoin ETF wave is clear: distribution creates its own demand, and timing the launch to coincide with a dip in incumbent flows can accelerate the shift.

The allocators writing the tickets over the next month will decide whether Solana’s ETF debut was a sign of an opening or an anomaly.

The post Solana ETFs are outperforming Bitcoin: Is SOL siphoning BTC liquidity? appeared first on CryptoSlate.



Source link

Bitcoin steadies above $103k following recent dip; Check forecast


Bitcoin tests $100K support after massive liquidation event rocks market

Key takeaways

  • BTC is trading above $103k, up 1.5% in the last 24 hours.
  • The coin could face further volatility amid weakening institutional demand.

Bitcoin reclaims $103k

The price of Bitcoin has been trading around $103k over the last few hours after rebounding from the $100k key support level on Wednesday. The short-term recovery is marred by the weakening institutional demand, as spot Bitcoin Exchange Traded Funds (ETFs) recorded $137 million in outflows on Wednesday, bringing their losing streak to six days.

Furthermore, on-chain data reveal that Bitcoin could face further selling pressure if the $100k psychological level fails to hold. In its report on Wednesday, CryptoQuant noted that Bitcoin’s price is currently hovering near critical support levels, a breakdown of which could trigger a sharper market correction.

The report added that if Bitcoin faces enough selling pressure in the near term, it could lose its $100k support level and dump towards the next major psychological level at $72k. 

Bitcoin could retest the $100k support level

The BTC/USD 4-hour chart remains bearish and efficient after Bitcoin faced rejection around its previously broken trendline earlier this week and declined 8.18% on Tuesday. The dip saw Bitcoin retest the 50% retracement level at $100,353 before reclaiming the $103k level on Wednesday.

At press time, Bitcoin is trading around the $103k region. The RSI of 38 means that Bitcoin is still facing selling pressure, with the MACD lines also within the bearish region. 

If the support level at $100,350 holds, Bitcoin’s price could rally towards the next resistance level at $106,435 over the coming hours and days. An extended bullish run would allow Bitcoin to reclaim its weekly high above $109k.

However, if the support level fails to hold, Bitcoin could extend its decline toward the next daily support at $97,460. Further downward movement would see BTC trading below $90k for the first time in six months.



Source link

How this $100M Bitcoin-backed loan could rewrite the corporate treasury playbook


The corporate Bitcoin (BTC) treasury trade that validated itself through the second quarter hit a wall in the fall.

Public companies added 159,107 BTC in the second quarter, pushing total corporate holdings to roughly 847,000 BTC, approximately 4% of the capped supply, and proving that “Bitcoin on balance sheet” worked as a capital-markets play.

Then the easy money stopped. NYDIG-tracked flows into digital asset treasury names fell to their lowest daily clip since mid-June through September and October.

Premiums to net asset value (mNAV) compressed across the cohort, pushing several treasuries toward or below parity. When a stock trades at or below its book value, issuing equity to buy more Bitcoin dilutes the existing holders.

Metaplanet faced that constraint in late October when its mNAV ratio dipped below 1. On October 31, the Tokyo firm drew $100 million from a Bitcoin-backed credit agreement and allocated the proceeds toward acquiring more BTC, its options-premium “Bitcoin income” business, and share repurchases.

Three days earlier, it had announced a $500 million BTC-collateralized credit facility to fund a one-year buyback of up to 150 million shares, about 13% of float, and further Bitcoin purchases as needed.

As of October 31, Metaplanet held approximately 30,823 BTC and remains committed to achieving a 210,000-BTC goal by 2027.

Date Company Move Size / Value BTC After Source
Nov 3 Strategy (ex-MicroStrategy) Additional purchase 397 BTC for ~$45.6M 641,205 BTC Strategy Form 8-K / press page.
Oct 31 Metaplanet Drew a BTC-backed loan to fund buys/buybacks $100M credit draw 30,823 BTC Yahoo Finance; TradingView/Cointelegraph recap.
Oct 27 Bitplanet (KOSDAQ) Began rules-based treasury program First buy: 93 BTC 173 BTC Yahoo Finance; CMC Academy explainer.
Sept 30 Hut 8 Expanded strategic BTC reserve 13,696 BTC added to the reserve 13,696 BTC Company Q3 release/PR.
Sept 22 Strive–Semler All-stock deal; plan to add BTC Strive said it will buy 5,816 BTC for ~$675M with the merger >10,900 BTC combined (planned) Reuters deal report.

Credit substitutes for equity when markets won’t pay a premium

Metaplanet’s move tests whether BTC-backed credit can substitute for equity premium financing when valuations compress.

The playbook that worked in the second quarter of issuing a stock at a premium to mNAV, using proceeds to buy Bitcoin, and accreting BTC per share, depends on investors paying more than book value for exposure.

When that premium is no longer available, equity issuance becomes dilutive. Securing credit against existing BTC holdings offers a way to continue accumulating without selling the coin or issuing dilutive stock.

The trade-offs are visible. Borrowing against BTC introduces collateral risk: a deeper drawdown increases the loan-to-value ratio and could force deleveraging or asset sales at the worst moment.

Floating-rate exposure adds a second vector: if dollar benchmarks reprice higher, the cost of carry turns negative.

But if BTC stabilizes and equity discounts close, the combination of buybacks and secured credit accretes BTC per share without tapping common equity. Metaplanet is betting it can use the credit line as bridge financing while it waits for equity premiums to rebuild.

The prepayment flexibility matters: if BTC rallies and the stock rerates, the firm can refinance or retire the loan and revert to equity issuance.

How the broader treasury cohort responds

Strategy disclosed additional BTC purchases in July and highlighted its Bitcoin balance sheet again in the third-quarter reporting. Still, the firm built its treasury over a multi-year period when equity premiums were more stable.

Newer entrants that ramped up holdings during the second quarter surge now confront the same valuation pressure Metaplanet faced, which consists of compressed premiums, mNAV discounts that have opened, and the equity issuance lever having stopped working.

The question for the rest of the cohort is whether Metaplanet’s approach becomes a template or a cautionary tale. If the loan is successful, as measured by buybacks closing the mNAV discount and BTC stabilizing, other treasuries facing similar valuation gaps will likely follow.

Infrastructure and potential repercussions

BTC-collateralized credit isn’t new, but its application to corporate treasury strategy is relatively new. Custodians and prime brokers built the infrastructure to lend against Bitcoin over the past several years, initially serving hedge funds and proprietary trading desks.

The mechanics are straightforward: post BTC as collateral, draw cash at a loan-to-value ratio that leaves margin for volatility, pay floating interest tied to a dollar-denominated benchmark.

What changed is the borrower profile. Corporate treasuries bring different incentives than trading desks. They’re optimizing for BTC per share rather than absolute profit and loss, and they’re borrowing not to trade but to accumulate or buy back stock.

That shift turns collateralized credit into a capital structure tool rather than a margin facility.

If Metaplanet’s approach is successful and other treasuries adopt BTC-backed credit to defend per-share metrics, the supply of unencumbered corporate BTC will shrink.

That tightens float and could amplify volatility if multiple treasuries face simultaneous margin calls during a drawdown.

For allocators, the implication is that treasury premiums become less about pure Bitcoin exposure and more about leverage and capital structure. A company trading at 1.2x mNAV with no debt is a different bet than one trading at one mNAV with $500 million in BTC-collateralized loans.

If credit serves as a substitute for equity issuance, treasuries can continue to accumulate during periods when their stock trades below book value. That removes one brake on the accumulation cycle, which consists of equity dilution, and replaces it with a more rigid constraint: collateral coverage.

Constraints that could derail it

The structural risk is reflexivity. If enough treasuries borrow against BTC to continue buying, they create demand that increases collateral values, allowing them to borrow more. That model works until it doesn’t.

A macro shock that drives BTC down 30% or 40% could trigger cascading margin calls across leveraged treasuries, forcing asset sales that accelerate the decline.

Floating-rate exposure introduces a second constraint. If the Fed holds rates higher for longer, the cost of servicing BTC-collateralized debt rises.

At some threshold, interest expense exceeds the appreciation needed to justify the loan, and the treasury either prepays or bleeds cash.

The stakes are whether BTC-backed credit can restart corporate accumulation when equity markets won’t cooperate, or whether it amplifies the downside for treasuries that took on too much leverage at the wrong moment.

Metaplanet’s $100 million draw tests the thesis in real time. If the firm closes its mNAV discount, continues to accumulate, and refinances before collateral or rate risks materialize, the playbook becomes replicable for other treasuries facing similar valuation pressures.

If BTC corrects hard enough to force deleveraging, the lesson is that credit substitutes for equity only when collateral values cooperate.

The answer will arrive over the next six to twelve months, as BTC either stabilizes and allows Metaplanet to compound its way out of leverage, or falls far enough to prove that borrowing against a volatile asset to buy more of it accelerates losses as much as gains.

Mentioned in this article



Source link