Kazakhstan’s Bitcoin mining community was massively disrupted by a prolonged nationwide internet blackout following mass protests in the country this week. Thousands of Kazakhs were protesting on the streets to express their displeasure after the government removed the price caps on liquefied petroleum gas (LPG) fuel.
The government had argued the previous prices were unsustainable for the economy. Without the market caps, the prices doubled overnight and the citizens reacted by taking to the streets. The prospects have been building over the past few days with several buildings torched, businesses looted and dozens of people killed. It has become one of the worst unrests experienced in the country since 1991 when the country gained independence from the Soviet Union.
The protests have led to the country’s President Kassym-Jomart Tokayev dismissing the government and limiting internet access. The monitoring group Netblocks confirmed that the country is under internet blackout. This means the population has no access to the internet and social media platforms.
Given that crypto mining depends on internet access, crypto miners are some of the most affected groups. Didar Bekbau, a co-founder of Kazakh mining firm Xive in a tweet said, “No internet, no mining.”
Without an internet connection in any part of Kazakhstan, no mining farm can connect to the mining pools.
The Impact of the Kazakhstan unrest on Bitcoin hashrate and price
The civil unrest in Kazakhstan is a concern for the larger crypto community. Accounting for 18.1% of the global hashrate, Kazakhstan is the second-largest miner of crypto, only behind the USA. Therefore, any disruptions in production have a far-reaching effect on the crypto market.
The mean hashrate of the Bitcoin network was at almost 229 exahashes per second (EH/s) at the beginning of 2022, it has however declined to below 170 at the time of writing.
The crypto market has also reacted to the changes in the hashrate. Bitcoin has lost more than 12% within the past five days. It currently trades at around $40,500 USD. These are some of the lowest it has retailed since September 2021. Other tokens like Ethereum have also followed suit, falling from over $4000 USD to the current $3050 USD.
While other factors like the Omicron COVID-19 variant might also be a factor in the price changes, the Kazakhstan unrest is also very impactful.
What next?
Kazakhstan had an ambitious crypto mining plan. The Data Center Industry & Blockchain Association of Kazakhstan had a forecast of producing $1.5 billion from mining within the next five years. However, this relies on a stable political and economical environment.
Also, this is not the first time crypto mining has faced a challenge. Kazakhstan itself rose to become a leading mining outlet following the Chinese crypto crackdown. However, unlike in China where the crypto ban was imminent, prolonged internet inaccessibility in Kazakhstan can have hasher impacts on the market.
For now, a Russian-led security alliance of peacekeepers are heading to Kazakhstan. The crypto world continues to hope for a bullish 2022.
