The country’s present political turmoil has seriously harmed Kazakhstan’s massive Bitcoin mining business. First, rising gasoline costs sparked popular outrage, which evolved into a broader public outcry over corruption, wealth disparity, and unemployment, resulting in violent protests against authoritarian President Kassym-Jomart Tokayev’s regime.
Kazakhstan’s Bitcoin mining operations are beset by uncertainty.
On the 5th of January, demonstrators allegedly forced their way into government buildings, attacked Almaty’s airport, and set fire to the mayor’s office. In addition, the demonstrators were involved in fatal skirmishes with the police and military, which resulted in the deaths of eight police officers and the injuries of dozens more officers and civilians.
To stop the bloodshed, President Tokayev enlisted the help of a Russian-led coalition of former Soviet states, dissolved his administration, and ordered the country’s telecoms service provider to switch down the internet, thus shutting off dissident communication.
This internet outage had a direct and devastating impact on Kazakhstan’s Bitcoin mining community, which had become a favorite contender when China tightened down on mining activities to reduce carbon emissions. Kazakhstan’s abundant energy resources attracted significant Chinese Bitcoin miners, and according to the Cambridge Centre for Alternative Finance, Kazakhstan accounted for upwards of 18 percent of the worldwide Bitcoin hashrate as of August 2021.
Problems with the Internet
Kazakhstan’s internet had been offline for 36 hours as of Friday morning. The shutdown affected 15% of the world’s Bitcoin miners, who could not access the Bitcoin network. The worldwide Bitcoin hashrate plummeted by 12% mere hours after it was enacted, highlighting Kazakhstan’s importance to the Bitcoin mining business on a global scale.
The decline in hashrate did not assist Bitcoin’s price, which plummeted below $42,000 to multi-month lows as investors became nervous.
Kazakhstan is currently second only to the United States in the global Bitcoin mining market, but the government has not always been pleased with the growing business. Indeed, politicians in Kazakhstan have started enacting new legislation to restrict cryptocurrency mining, including one that wants to increase mining fees beginning in 2022. In addition, Kazakhstan’s crypto mining also relies on carbon-intensive coal power facilities, which are unsustainable.
As a result of Kazakhstan’s political turmoil, crypto miners may look for new countries to shop. With some of the world’s cheapest and most sustainable energy sources, the United States has emerged as a new sanctuary for crypto miners, and there may be a surge in new mining operations.