Cambridge research flags U.S. concentration in Ethereum node activity

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Cambridge flags US node concentration

Highlights

Cambridge Centre for Alternative Finance reports nearly one third of Ethereum node activity is in the U.S., with 39% in the EU excluding the UK.
Three hosting providers—Hetzner, AWS, and OVH—dominate Ethereum node hosting, raising centralization and jurisdictional risks, especially after previous Hetzner restrictions on blockchain services.
Post-merge, Ethereum’s annual power consumption fell 99.98% to about 7.9 gigawatt-hours, with 56% sourced from sustainable energy, exceeding the global average of 43%.

Node concentration and network threshold

As reported by The Block, citing the Cambridge Centre for Alternative Finance, nearly a third of Ethereum node activity sits in the U.S., with about 39% spread across the EU excluding the UK. The research says this distribution matters because Ethereum does not need half of its validators to fail for a live disruption, and checkpoints stop finalizing once more than a third go offline at once.

Researcher Neumuller says node activity clusters around three hosting providers, Hetzner, AWS and OVH, creating counterparty and jurisdictional concerns. He notes Hetzner’s terms of service previously barred blockchain node operations, although he says that may since have changed.

The study also points to a regulatory dimension. In 2022, the U.S. Securities and Exchange Commission argued it had jurisdiction over Ethereum because most nodes were hosted in the United States, meaning transactions would fall under U.S. securities law.

Methodology update and wider industry implications

The report, titled "Ethereum After the Merge," revises Cambridge’s earlier methodology by using empirical data on how nodes split between residential and commercial hosting instead of theoretical assumptions. Neumuller says network upgrades after the merge prompted the revision because software changes can alter hardware power use.

Cambridge estimates Ethereum consumes about 7.9 gigawatt-hours annually, equal to roughly one megawatt of continuous power, or about 2,000 UK households. That is about 99.98% below pre-merge levels, while sustainable power usage across the network now exceeds 56%, compared with a global average of 43%.

Neumuller describes the current geographic distribution as healthy, while stressing that the community should keep monitoring it. He also says client software concentration poses a parallel risk, because a bug in a dominant client can spread across the network, and adds that the report covers both consensus and execution client distribution.

The Ethereum Foundation supported the work, according to Neumuller, who says he has not directly discussed the centralization findings with the organization. He adds that his view that the foundation emphasizes decentralization is based on his reading of its public communications.

Our earlier coverage of the UK’s designation of major cloud providers as “critical third parties” explained that Microsoft, Google, Amazon and Oracle would be brought under direct supervision by the Bank of England and the Financial Conduct Authority. We noted that the move targets concentration risk in essential outsourced services, where reliance on a small set of providers can turn outages or disruptions into system-wide stability issues for the financial sector.

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