Bitcoin Earthquake Damage

Earthquake Infrastructure Failure and Backup Access

This memo is published by CustodyStress, an independent Bitcoin custody stress test that produces reference documents for individuals, families, and professionals.

When Distribution Fails at Regional Scale

An earthquake strikes a metropolitan region. Buildings collapse. Infrastructure fails. Power outages persist for days. Roads become impassable. Communication networks go down. A bitcoin holder in the affected area stored custody materials across multiple locations within the region believing distribution protected against single-point failure.

Bitcoin earthquake damage scenarios test whether geographic distribution was adequate when the disaster scope exceeded the distribution scale. Materials stored in separate buildings within the same city all become inaccessible when the earthquake affects the entire city. The holder assumed distributing custody materials across locations created redundancy. Regional disasters reveal that distribution within a disaster-prone region creates correlated failure points.

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When Distribution Fails at Regional Scale

A holder distributed seed phrase backups across three locations: home, office, and safe deposit box. All three were in the same city. An earthquake damaged all three buildings. The home is structurally unsafe to enter. The office building collapsed. The bank housing the safe deposit box is closed indefinitely pending structural assessment. All three backup locations became inaccessible simultaneously.

The holder has the hardware wallet that was in their pocket during the earthquake. They cannot access it without the PIN they do not remember. The seed phrase backups that would allow recovery are in locations they cannot reach. Geographic distribution existed but at a scale smaller than the disaster. All distributed copies failed together.

Another holder stored one backup at home and another with a relative in a different neighborhood of the same city. The earthquake affected the entire metro area. Both neighborhoods sustained damage. Both locations became inaccessible for weeks. The holder evacuated to a shelter. They cannot access either backup location despite having separated them geographically within the city limits.

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Infrastructure Failure Compounding

Earthquake damage extends beyond building destruction. Power grids fail. Internet connectivity drops. Banking systems go offline. Even custody materials that survived physical damage become operationally inaccessible when supporting infrastructure fails.

A holder stored bitcoin wallet files on a computer at home and backed them up to cloud storage. The earthquake knocked out power to the entire region. The computer cannot boot without electricity. Cloud storage providers operated servers in data centers within the affected area. Those servers are offline. Both the local copy and cloud backup are inaccessible despite not being physically damaged.

Bank closures prevent safe deposit box access. A holder's seed phrase is in a box at a bank branch that remained structurally sound. The bank closed all branches in the affected region to assess damage and ensure employee safety. Weeks pass before branches reopen. The seed phrase is physically fine but operationally unreachable during the closure period.

Communication network failures isolate holders from remote resources. A holder memorized their seed phrase and can access bitcoin from anywhere with internet. The earthquake destroyed cell towers and fiber optic lines. Internet access is unavailable throughout the region. The memorized seed phrase cannot be used to access bitcoin without connectivity.

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Multi-Signature Arrangements and Earthquake Dispersion

Multi-signature wallets require multiple parties to authorize transactions. A holder used a two-of-three multisig arrangement. They held one key. A business partner held another. A custody service held the third. The holder and their business partner both lived in the same city. The earthquake affected them both simultaneously.

Both local keyholders cannot access their keys due to building damage. The third key is with an out-of-area custody service. But the multisig arrangement requires two signatures. One out-of-area key is insufficient. The bitcoin cannot move even though one keyholder is unaffected. The arrangement needed two of the three keys dispersed beyond the earthquake zone to maintain function after a regional disaster.

Some multisig setups concentrate keys geographically without realizing it. A holder thinks they achieved distribution by using three different custody services. Investigation after an earthquake reveals two of those services operated their secure facilities in the same metro area. The earthquake affects both simultaneously. The distribution that appeared adequate on paper failed because the holder did not verify the physical location of each keyholder's infrastructure.

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Physical Material Destruction

Some custody materials are physically destroyed by earthquakes. Paper seed phrases burn in fires that follow building collapses. Hardware wallets are crushed under rubble. USB drives containing wallet backups are lost in debris. Physical destruction eliminates materials regardless of distribution when all distributed copies were in the affected zone.

A holder stored seed phrases in fireproof boxes at home and at their office. Fireproof boxes protect against fires but not structural collapse. The office building pancaked during the earthquake. The fireproof box is buried under tons of concrete and steel. Even if the paper inside survived, retrieving it requires demolition and excavation that may never occur or may take months.

Water damage from broken pipes and firefighting efforts destroys materials that survived the shaking. A holder's safe containing backup materials was not damaged structurally. But water from a burst pipe on the floor above flooded the room. The safe was not waterproof. Paper backups dissolved. Digital storage media was corrupted. The earthquake did not directly destroy the materials. Secondary water damage did.

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Evacuation and Displacement

Earthquake survivors often evacuate to temporary shelters or leave the affected region entirely. During evacuation, accessing custody materials becomes impossible. A holder was displaced to a shelter thirty miles away. Their seed phrase is in a safe at their damaged home. Authorities have cordoned off the neighborhood. Re-entry is prohibited until structural assessments complete. Weeks pass. The holder needs to access bitcoin for emergency expenses. The materials remain in the restricted zone.

Some holders evacuate and never return. Earthquake damage is severe enough that relocation becomes permanent. A holder moves to another state. Their seed phrase backup was in a safe deposit box in the earthquake zone. They plan to return eventually to retrieve it. Years pass. The bank closed that branch. Safe deposit box contents were transferred to another facility. The holder receives no notification because the bank's records were damaged. Locating the backup becomes a research project years after the earthquake.

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Documentation Loss

Earthquake damage extends to documentation about custody arrangements. A holder maintained a detailed inventory of where custody materials were stored. The inventory was on paper in a file cabinet at home. The earthquake destroyed the home and the inventory. The holder remembers there were multiple backups but cannot remember all locations. Some backup materials may still exist but the holder cannot identify where to look for them.

Digital documentation faces similar risks. A holder documented their custody arrangement in an encrypted file on their computer. The computer's hard drive failed during the earthquake. Cloud backups existed but were on servers in the affected region. Both the local documentation and its backup are lost. The holder must reconstruct their custody arrangement from memory while managing displacement and other earthquake recovery challenges.

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Third-Party Keyholder Availability

Some holders delegated custody material storage to third parties believing this created geographic separation. The third party lived in the same metro area. The earthquake affected them too. A holder gave a copy of their seed phrase to their attorney for safekeeping. The attorney's office building sustained severe damage. The attorney evacuated to another city. Reaching them to request the seed phrase takes days. When contact is made, the attorney cannot access their office to retrieve the materials.

Family members serving as backup keyholders may prioritize other earthquake response activities over helping with bitcoin access. A holder's sibling holds a backup hardware wallet. After the earthquake, the sibling is managing their own property damage, checking on elderly parents, and securing temporary housing for their family. The holder's request to access the backup wallet occurs in the context of multiple competing urgent priorities. Days pass before the sibling can address it.

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Seismic Risk Assessment Failures

Some holders assessed seismic risk superficially when designing custody arrangements. They knew they lived in an earthquake zone. They distributed materials within the local area believing this was adequate. The earthquake that occurred was larger than they anticipated. A holder in California distributed backups across Los Angeles County. They assumed different cities within the county provided adequate separation. A magnitude 7.5 earthquake affects the entire county. All distributed backups become inaccessible together.

Other holders underestimated secondary earthquake effects. They focused on building collapse risk and used reinforced locations. They did not consider that liquefaction could affect entire neighborhoods regardless of building strength. A holder stored materials in earthquake-resistant safes at three locations within a coastal city. The earthquake triggered liquefaction across the waterfront area. All three locations were in the affected zone. The safes remained intact but the buildings surrounding them became inaccessible due to ground failure.

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Long Recovery Timelines

Earthquake recovery extends over months or years. A holder needs to access bitcoin weeks after the earthquake for living expenses while displaced. Normal access routes remain blocked. The safe deposit box is still inaccessible. The damaged home remains off-limits. The holder must wait or attempt recovery using incomplete information and degraded materials.

Some custody materials remain recoverable but at significant cost and delay. A holder's hardware wallet is buried in rubble of their collapsed office. The building will eventually be demolished and debris removed. At some point during demolition the wallet may be found. Or it may be destroyed by heavy equipment. Or it may be hauled away with debris to a landfill. The holder can wait and hope for recovery or can attempt to use other backup materials if any survived.

Insurance claims and recovery processes create additional complexity. A holder files earthquake insurance claims. The insurance company requires documentation of losses. Proving that bitcoin custody materials were lost in the earthquake is difficult when the materials were private keys and seed phrases. Insurance adjusters do not know how to value these items. Claims take months to resolve while the holder needs access to funds.

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Aftershocks and Continuing Risk

Aftershocks following major earthquakes create continuing access risks. A holder's home was damaged but not destroyed. They attempt to enter to retrieve custody materials. An aftershock strikes while they are inside. The building becomes more unstable. They evacuate without retrieving the materials. Further attempts are too dangerous. The materials are physically reachable but accessing them risks personal safety.

Continuing seismic activity prevents repair and recovery. A bank building housing a safe deposit box was damaged but repairable. Before repairs begin, a series of significant aftershocks cause additional damage. Repair timelines extend. The safe deposit box remains inaccessible for additional months beyond the initial earthquake. The holder's plan to access backup materials after the initial closure is frustrated by ongoing seismic events.

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Regional Versus Local Distribution

The adequacy of geographic distribution depends on disaster scale. Local distribution protects against house fires or burglary. Regional distribution is necessary to protect against earthquakes affecting entire metro areas. A holder who distributed materials across a single city believed they had adequate protection. The earthquake revealed their distribution was local when regional distribution was needed.

Defining adequate regional distribution is complicated by uncertainty about future earthquake locations and magnitudes. A holder in San Francisco distributed one backup to San Jose believing this provided regional separation. A very large earthquake affects the entire Bay Area. Both locations become inaccessible. True regional distribution for that geography might require backups in Sacramento or Los Angeles or out of state entirely. But such wide distribution creates other access and security tradeoffs.

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Comparing Earthquake Risks to Other Disaster Types

Earthquakes differ from other disasters in geographic scope and warning time. Hurricanes affect large regions but provide days of warning for evacuation and material retrieval. Earthquakes strike without warning and affect regions too large for typical local distribution strategies to handle. A holder who protected adequately against hurricanes by distributing materials across their city discovers that same distribution fails against earthquakes affecting the entire region.

Wildfires move predictably allowing evacuation from threatened areas. Holders can retrieve custody materials when evacuating ahead of fires. Earthquakes provide no such opportunity. Materials become inaccessible before the holder can act. The sudden-onset nature combined with wide geographic impact creates a disaster profile that custody arrangements designed for other threats may not handle.

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Assessment

Bitcoin earthquake damage scenarios expose geographic distribution inadequacies when disasters affect entire regions. Materials distributed across different locations within a metro area all become inaccessible when the earthquake affects the full area. Infrastructure failures compound physical damage blocking access to materials that survived structurally. Multi-signature arrangements fail when multiple keyholders are in the affected zone.

Physical destruction eliminates materials. Evacuation and displacement prevent retrieval from damaged locations. Documentation about custody arrangements is lost in the same disaster. Third-party keyholders face their own earthquake impacts affecting availability. Long recovery timelines and aftershocks extend access disruption beyond the initial event.

Local distribution adequate for house fires proves insufficient for regional disasters. Seismic risk assessment failures occur when distribution scale does not match potential earthquake scope. Understanding these dynamics explains why custody arrangements that protected against localized threats fail when earthquakes affect regions rather than individual locations.

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System Context

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