When the Lights Go Out, So Does Crypto: Iberian Blackout Puts Blockchain to the Test

The widespread power outages that recently plunged Portugal and Spain into darkness shed light on the enduring value of cash during critical situations. This event also prompted questions about the truly decentralized nature of cryptocurrency, given its reliance on centralized electricity infrastructure.

BeInCrypto spoke with representatives from CertiK, Brickken, Wanchain, and Money on Chain to learn what this means for public trust in crypto and what the sector needs to provide financial services around the clock, even when centralized distribution channels fail.

Digital Finance Grinds to a Halt

A significant power disruption last week left millions in the dark across Spain and Portugal, with knock-on effects in parts of France and Morocco.

According to research from the Baker Institute, Spain lost approximately 15 gigawatts of capacity in just five seconds, equivalent to 60% of its national electricity demand. The outages lasted for about 18 hours. 

Without internet and electricity, daily financial instruments like home banking services, digital wallets, and ATMs became obsolete.

“When‬‭ power‬‭ grids‬‭ fail,‬‭ the‬‭ entire‬‭ ecosystem‬‭ behind‬‭ these‬‭ systems‬‭ grinds‬‭ to‬‭ a‬ halt:‬‭ Mobile‬‭ phones‬‭ can’t‬‭ connect,‬‭ ATMs‬‭ shut‬‭ down,‬‭ and‬‭ internet-based‬‭ wallets‬‭ become‬‭ inaccessible.‬‭ In‬‭ such‬‭ moments,‬‭ the‬‭ digital‬‭ economy‬‭ exposes‬‭ a‬‭ key‬‭ vulnerability—without‬‭ electricity, the convenience of tech-driven finance collapses,” Natalie Newson, Senior Blockchain Investigator at CertiK, told BeInCrypto. 

‬During those hours, cash won back the throne of preferred payment. 

“This‬‭ is‬‭ why‬‭ access‬‭ to‬‭ physical‬‭ cash‬‭ remains‬‭ critical,‬‭ not‬‭ only‬‭ in‬‭ developing‬‭ countries‬‭ but‬‭ also‬‭ in‬‭ developed‬‭ nations— as‬‭ seen‬‭ during‬‭ recent‬‭ outages‬‭ in‬‭ Europe.‬‭ Digital‬‭ systems,‬‭ whether‬ centralized‬‭ or‬‭ decentralized,‬‭ are‬‭ ultimately‬‭ dependent‬‭ on‬‭ power‬‭ and‬‭ connectivity.‬‭ Cash‬‭ provides‬‭ a reliable fallback in scenarios where digital tools fail,” ‭Manuel Ferrari, Co-founder of Money On Chain,‬ told BeInCrypto.

The episode also raised questions over crypto’s usability during times of crisis.

Is Crypto’s Decentralization Meaningless Without Access and Power?

The demonstrated need for paper currency during infrastructure disruptions suggests that even though crypto is a modern financial innovation, it still falls short of its predecessors during challenging circumstances.

Even with its core principle of decentralization, blockchain technology relies significantly on centralized infrastructure.

“For‬‭ example,‬‭ most‬‭ blockchain‬‭ nodes‬‭ are‬‭ hosted‬‭ on‬‭ a‬‭ small‬‭ number‬‭ of‬‭ centralised‬‭ cloud‬‭ providers‬‭ like‬‭ AWS.‬‭ This‬‭ not‬‭ only‬‭ creates‬‭ single‬‭ points‬‭ of‬‭ failure,‬‭ but‬‭ also‬‭ exposes‬ blockchain‬‭ networks‬‭ to‬‭ external‬‭ control.‬‭ Fundamentally,‬‭ blockchain‬‭ runs‬‭ on‬‭ the‬‭ Internet.‬‭ Without‬‭ the‬‭ Internet,‬‭ blockchain‬‭ doesn’t‬‭ work.‬‭ And‬‭ the‬‭ Internet‬‭ is‬‭ centrally‬‭ governed‬‭ by‬‭ ISPs‬‭ and‬‭ is‬‭ subject‬‭ to‬‭ geopolitical‬‭ pressures.‬‭ More‬‭ subtly,‬‭ many‬‭ blockchains‬‭ also‬‭ operate‬‭ with‬‭ only‬‭ one‬‭ or‬‭ two‬‭ client‬‭ implementations,‬‭ meaning‬‭ that‬‭ any‬‭ flaw‬‭ or‬‭ bug‬‭ in‬‭ that‬‭ client‬‭ software‬‭ can‬‭ impact‬‭ the‬‭ entire network,” Wanchain CEO Temujin Louie told BeInCrypto. 

The same limitations apply to the applications that manage crypto assets and process transactions.

“‬The‬‭ blockchain‬‭ may‬‭ be‬‭ decentralized,‬‭ but‬‭ access‬‭ to‬‭ it‬‭ is‬‭ not.‬‭ Most‬‭ users‬‭ depend‬‭ on‬‭ internet‬ service‬‭ providers,‬‭ centralized‬‭ exchanges,‬‭ and‬‭ mobile‬‭ devices—all‬‭ of‬‭ which‬‭ are‬‭ tied‬‭ to‬‭ national‬ power‬‭ grids‬‭ and‬‭ telecom‬‭ systems.‬‭ Without‬‭ these‬‭ utilities,‬‭ the‬‭ decentralized‬‭ promise‬‭ of‬‭ crypto‬‭ becomes practically irrelevant for the average user,” Newson added.

Cryptocurrency might inadvertently weaken public trust in its capabilities by not functioning as a genuine alternative financial solution when needed most.

Blackouts as a Test of Public Trust

Suppose cryptocurrency can’t provide a functional financial alternative precisely when traditional systems falter due to events like power outages. In that case, it risks losing public faith in its ability to be a viable and superior financial system in the long run.

“‬Public‬‭ trust‬‭ depends‬‭ on‬‭ perceived‬‭ reliability.‬‭ If‬‭ crypto‬‭ is‬‭ seen‬‭ as‬‭ something‬‭ that‬‭ fails‬‭ under‬‭ stress,‬‭ users‬‭ may‬‭ hesitate‬‭ to‬‭ rely‬‭ on‬‭ it.‬‭ This‬‭ is‬‭ especially‬‭ true‬‭ for‬‭ people‬‭ who‬‭ are‬‭ still‬‭ new‬‭ to‬‭ the‬‭ space,” Felipe D’Onofrio, Chief Technology Officer at Brickken‬, told BeInCrypto.

Trust in payment methods grows from their ease of use, so if crypto wallets become inaccessible during emergencies, individuals might be reluctant to use them as their main way to pay.

Still, experiencing these issues now can pave the way for future enhancements.

“These‬‭ events‬‭ can‬‭ also‬‭ highlight‬‭ weaknesses‬‭ that‬‭ lead‬‭ to‬‭ better‬‭ solutions.‬‭ Just‬‭ like‬‭ the‬‭ early‬‭ internet‬‭ had‬‭ to‬‭ overcome‬‭ outages,‬‭ crypto‬‭ is‬‭ still‬‭ evolving to meet the demands of the real world,” D’Onofrio added.

Existing features within crypto technology already enable some offline uses, and expanding on these could provide a clear direction for development.

Offline Crypto Potential Offers Glimmers of Resilience

Certain existing cryptocurrency systems have already incorporated a few design features that mitigate their reliance on a stable power grid.

‬”Some‬‭ hardware‬‭ wallets‬‭ with‬‭ long‬‭ battery‬‭ life‬‭ and‬‭ offline‬‭ capabilities‬‭ offer‬‭ a‬‭ glimpse‬‭ of‬ resilience,‬‭ especially‬‭ in‬‭ peer-to-peer‬‭ transfers,” Newson said. 

While D’Onofrio pointed to other available tools, he clarified that they lack the widespread adoption and user-friendliness needed for broad use.

“There‬‭ are‬‭ some‬‭ interesting‬‭ developments‬‭ out‬‭ there,‬‭ like‬‭ satellite‬‭ nodes,‬‭ mesh‬‭ networks,‬‭ or‬‭ ultra-low-power‬‭ wallets.‬‭ These‬‭ systems‬‭ are‬‭ working‬‭ toward‬‭ more‬‭ resilience,‬‭ but‬‭ they’re‬‭ not‬‭ yet‬‭ widely‬‭ adopted.‬‭ Right‬‭ now,‬‭ most‬‭ of‬‭ the‬‭ crypto‬‭ ecosystem‬‭ still‬‭ relies‬‭ on‬‭ traditional‬‭ infrastructure.‬‭ The‬‭ blockchain‬‭ can‬‭ survive‬‭ offline,‬‭ but‬‭ the‬‭ tools‬‭ most‬‭ users‬‭ depend on are not built for that kind of environment yet,” he said. 

Similar considerations arose when discussing the potential of Decentralized Physical Infrastructure Networks (DePINs) to lessen overall dependence on centralized electricity grids.

Can DePINs Make Crypto Networks More Resilient?

DePINs have gained significant traction in the crypto sector over the last year due to their potential to decentralize various services using blockchain and token rewards to manage, own, and operate infrastructure. Today, the DePIN industry boasts a market capitalization of over $19 billion and more than $1 billion in trading volumes.

Top DePIN coins by market capitalization. Source: CoinGecko

These networks are increasingly facilitating network connectivity and community-based access to electricity. Some experts suggested this technology could help lessen the impact of outages affecting centralized distribution channels.

“DePINs,‬‭ in‬‭ theory,‬‭ might‬‭ enhance‬‭ grid‬‭ resilience,‬‭ potentially‬‭ reducing‬‭ the‬‭ likelihood‬‭ of‬‭ countrywide‬‭ power‬‭ outages.‬‭ They‬‭ introduce‬‭ a‬‭ level‬‭ of‬‭ flexibility‬‭ and‬‭ programability‬‭ that‬‭ could‬‭ theoretically‬‭ facilitate‬‭ demand-response‬‭ programs‬‭ or‬‭ incentivise‬‭ people‬‭ to‬‭ adjust‬‭ their‬‭ energy‬‭ usage‬‭ during‬‭ peak‬‭ times,” Louie pointed out.

At the same time, he pointed out that DePINs alone cannot provide a complete solution to massive issues like widespread power outages.

“However,‬‭ it‬‭ is‬‭ far‬‭ too‬‭ early‬‭ to‬‭ think‬‭ of‬‭ DePINs‬‭ as‬‭ a‬‭ comprehensive‬‭ solution‬‭ that‬‭ can‬‭ singlehandedly‬‭ solve‬‭ a‬‭ country’s‬‭ power‬‭ stability‬‭ issues.‬‭ Rather,‬‭ focus‬‭ should‬‭ be‬‭ on‬‭ the‬‭ targeted‬‭ integration‬‭ of‬‭ DePINs‬‭ into‬‭ existing‬‭ grid‬‭ infrastructure‬‭ to‬‭ help‬‭ alleviate‬‭ stress‬‭ on the grid and demonstrate the worth of DePINs in a real-world setting,” Louie added.

From his perspective, D’Onofrio stated that DePINs could provide a more complete solution when combined with other tools that bolster local resilience to these threats.

“We’re‬‭ likely‬‭ to‬‭ see‬‭ more‬‭ integration‬‭ with‬‭ decentralized‬‭ infrastructure,‬‭ like‬‭ community-run‬‭ mesh‬‭ networks‬‭ or‬‭ solar-powered‬‭ nodes.‬‭ If‬‭ combined‬‭ with‬‭ tools‬‭ like‬‭ delayed-broadcast‬‭ wallets‬‭ or‬‭ peer-to-peer‬‭ communication‬‭ protocols,‬‭ these‬‭ systems‬‭ could‬‭ keep‬‭ crypto‬‭ activity‬‭ going‬‭ even‬‭ when‬‭ traditional‬‭ services‬‭ are‬‭ down.‬‭ It’s‬‭ about‬‭ building‬‭ more‬‭ localized‬‭ resilience into the global system,” he said.‭

Despite their differences, crypto and traditional finance ultimately grapple with many of the same underlying problems when operating during infrastructure disruptions.

Policy Solutions for a Resilient Digital Economy

Last week’s power outages in the Iberian Peninsula underscored the enduring importance of cash as a financial lifeline in times of crisis. With global economic systems increasingly depending on digital finance, experts emphasized policymakers’ need to develop lasting solutions that ensure infrastructure resilience and emergency preparedness.

“‬Policymakers‬‭ must‬‭ treat‬‭ infrastructure‬‭ resilience‬‭ as‬‭ the‬‭ bedrock‬‭ of‬‭ digital‬‭ finance.‬‭ That‬‭ includes‬‭ diversifying‬‭ energy‬‭ sources,‬‭ supporting‬‭ local‬‭ microgrids,‬‭ incentivizing‬‭ offline‬‭ crypto‬‭ solutions,‬‭ and‬‭ ensuring‬‭ regulatory‬‭ frameworks‬‭ accommodate‬‭ these‬‭ technologies.‬‭ In‬‭ a‬‭ crisis,‬‭ access‬‭ matters‬‭ more‬‭ than‬‭ innovation—preparing‬‭ now‬‭ ensures‬‭ digital‬‭ systems‬‭ stay‬‭ functional‬‭ when‬‭ they’re‬‭ needed most,” Newson concluded.

Moving forward, the strength of the digital economy will be determined by its physical infrastructure, and prioritizing this could position crypto for long-term success.