The football world cup is not going too well for the Germans. Thank goodness that they found something else that they are good at. Why is Germany running a vital part of blockchain infrastructure and specifically so many Ethereum nodes?

CV VC Labs report reveals current infrastructure

According to a blockchain report from CV VC Labs, Germany is running the largest share of Ethereum’s infrastructure in Europe. A total of 22.28 % of all Ethereum nodes worldwide are situated in Germany.

The world’s biggest infrastructure provider to Ethereum is the United States, with a whopping 45.3 % share. Nodes are important to Ethereum’s network because they validate transactions and propagate them. Most of these nodes are not taking part in staking, which is why many analysts pay attention to that statistic. Their work is crucial to the overall health of Ethereum and requires that enough nodes are running.

With Bitcoin, there is a very similar picture. According to the website Bitnodes about 9.36 % of all nodes are running in Germany and 12.89 % in the US. The vast majority with 53.47 % is operated using the Tor network, which means that it is impossible to pin down the countries they are situated in.

Is blockchain infrastructure too centralized?

One reason why Germany is the second-biggest provider of blockchain infrastructure worldwide and the biggest in Europe is the infrastructure of the internet. Frankfurt is the biggest internet hub in the world, with DE-CIX as the biggest Internet Exchange.

Therefore, many service providers in Europe are hosting in Germany, preferably in a location close to or in Frankfurt on the Main. Most Ethereum and Bitcoin nodes are not run on hardware that is situated in somebody’s basement. Instead, many true believers in blockchain technology simply book a virtual private server paying a small fee for a professional environment to run their own little blockchain project and support their favorite cryptocurrency.

With that picture in mind, there is also some concern that blockchain infrastructure might be too centralized since it is hosted on the hardware of a handful of providers. Some of them are even forbidding using their services to host Ethereum or Bitcoins nodes per their general terms. In August 2022, Hetzner Online, one of the biggest internet service providers in Germany reiterated its stance on Reddit. Effectively banning all activities related to cryptocurrencies from their servers.