A nationwide internet shutdown in Kazakhstan impacted the cryptocurrency mining business this week, reducing Bitcoin’s worldwide computing power. Russian forces have been dispatched to the Central Asian country to quell unrest that has resulted in the deaths of dozens of people and the looting of government facilities.
Internet shutdown in Kazakhstan impacted the cryptocurrency mining
Kazakhstan, on the other hand, is a major cryptocurrency player. As China clamped down on crypto mining operations, it became the world’s second-largest center for Bitcoin mining after the United States in 2021.
Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers, which compete to solve hard mathematical riddles in an energy-intensive process, usually at data centers across the world.
Kazakhstan accounted for 18% of the global “hash rate” — crypto jargon for the amount of computational power used by computers linked to the bitcoin network — in August of last year.
The percentage was just 8% a few months ago, before China’s recent crackdown on bitcoin mining. Kazakhstan is witnessing its most violent public demonstrations in three decades. Protests that started over fuel price hikes have turned into larger anti-government riots, with a police officer reportedly beheaded and demonstrators “liquidated” by security forces.
The country was rocked by “a nation-scale internet blackout” earlier this week, which prohibited Kazakhstan-based miners from accessing the bitcoin network, according to monitoring site Netblocks.
AntPool and F2Pool, for example, are global mining pools that collaborate to produce bitcoin. According to data from mining service BTC.com, the hash rate among the groups was down roughly 14% on Thursday compared to two days earlier.F2Pool and AntPool did not respond to requests for comment.
Last year, the Kazakh government announced that it will target unregistered “grey” miners first, estimating that they consume twice as much energy as “white” or fully registered miners.
On Thursday, Bitcoin plummeted below $43,000 (approximately Rs. 32 lakh), touching multi-month lows as investor demand for risky assets waned as the US Federal Reserve signaled a shift toward more aggressive policy.
The bigger the number of miners on the network, the more computer power is required to mine new Bitcoin. If miners leave the network, the hash rate drops, making it easier for the surviving miners to create new coins.
Kazakhstan’s cryptocurrency mining farms are primarily powered by old coal plants, which, along with coal mines and entire cities developed around them, are causing problems for the country’s government as they try to decarbonize the economy.
According to Kazakhstan’s energy ministry, “grey” mining might consume up to 1.2 GWT of power, which, when combined with “white” miners’ 600 MWt, equals nearly 8% of the country’s entire generation capacity. The country’s rebellion began with protests in the west against a fuel price hike on New Year’s Day.
If you find this article informative then do not forget to share it with your friends and family!