Source: Bitcoin BTC
- Political unrest in Kazakhstan has cut the Bitcoin mining hash rate by 13 percent and sent BTC down to $43,000.
- Riots came about due to a doubling in fuel prices, causing government resignation and an internet shutdown.
Widespread civil unrest in Kazakhstan has sent the Bitcoin mining hash rate tumbling down by 13.4 percent. Reportedly, violent protests arose when the government removed price caps on liquefied petroleum gas (LPG) fuel on Jan. 1. Officials argued that the then lower prices were unsustainable for the country’s energy sector.
Prices doubled overnight, with disconcerted citizens taking to the streets of Almaty and other western regions in objection. Many Kazakhs had modified their cars to run on fuel rather than petroleum due to its previous favorable prices. Now, several government buildings have been torched, and protestations seem likely to carry on for a while.
Kazakhstan civil unrest impacts Bitcoin hashrate and price
The situation has now called on attention from the rest of the crypto community, due to its effect on Bitcoin mining. Of note, Kazakhstan is the world’s second-largest miner of cryptocurrency, according to visualcapitalist.com. With 18.1 percent of the global hashrate, the nation is only second to the US, which dominates by 35.4 percent.
This has been the case since China’s mass eviction of miners, which led them to seek friendlier jurisdictions – like neighboring Kazakhstan. Many domestic and foreign miners capitalized on the cheap electricity prices of $0.055/kWh, according to Global Petrol Prices. This is less than half what the US offers ($0.12/kWh).
Following mass disorder, the country’s presiding cabinet resigned, while state-owned Kazakhtelecom shut down the country’s internet. Network activity declined by 2 percent, while Bitcoin’s hashrate dropped from 205,000 petahash per second (PH/s) to 177,330 PH/s, per data from YCharts.com.
At press time, the internet was still inaccessible in Kazakhstan, with no clear timeline of when it is due back. Even more, BTC has plummeted 7.3 percent in the past 24 hours to trade at $43,083, a price that is the last seen in Sept. 2021. Additionally, the global cryptocurrency market cap has seen a 7.9 percent drop in the day to $2.17 trillion.
What next?
Should the internet remain inaccessible, the consequences could be harsher. The Data Center Industry & Blockchain Association of Kazakhstan expects to generate $1.5 billion each from legal and illicit cryptocurrency mining in the next five years. This is now the worst unrest in the country in over a decade. However, a Russia-led security alliance of ex-Soviet states plans to send peacekeeping forces to Kazakhstan.
The last time Bitcoin mining in Kazakhstan was affected, was in September 2021 and it was due to blackouts. And even though the country managed to keep its leadership position as a miner, its energy sources have been scrutinized for their environmental impact. 87 percent of power sources in Kazakhstan are carbon-related.
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