The year got off to a turbulent start in Kazakhstan, the ninth largest country in the world. The drastic rise in fuel prices has caused popular unrest and a complicated political situation that has had one last consequence: the internet cut off throughout the country last Wednesday .
That cut has not only had a clear impact on communications throughout the country or on access to all kinds of services, but also on the price of bitcoin, which is falling significantly . The reason: Kazakhstan is today responsible for 18% of bitcoin mining according to the Cambridge Center for Alternative Finance, and if the internet does not work, those mining processes cannot be completed either. Due in part to this, the value of bitcoin is falling and has fallen to $ 41,270.
Kazakhstan is the second country in the world in bitcoin mining
China traditionally dominated the bitcoin mining segment, but the persecution that the Chinese government launched months ago caused many miners to abandon that activity or move . The United States is now “the great producer” with a 35.4% share, but curiously the second most relevant country in bitcoin mining is Kazakhstan , which has an 18.1% share (a year ago that share was 8 %) and is even ahead of Russia according to expert data.
The turbulent situation the country is going through has prompted President Kassym-Jomart Tokayev to request the help of Russian military forces, but also to order the national telecommunications provider to prevent internet access .
According to Kevin Zhang, director of the firm criptodivisas Foundry, the Internet outage caused that approximately 15% of the miners remain offline , precisely because that is the amount that perform this activity from Kazakhstan. As one Kazakh bitcoin miner explained on Twitter, “without the internet there is no mining.”
The growth of cryptocurrency mining in Kazakhstan has had a clear impact on its energy consumption. The body that regulates consumption there, called KEGOC, indicated that in the first nine months of 2021 consumption grew by 11.8%.
That put in place measures to limit the consumption of new facilities and the requirements of mining, which, as Zhang explained, ” have not made it illegal, they just want to limit it because it is growing so fast .” A new amendment in Kazakhstan was launched this January 2022 and requires paying 0.23 cents more per kWh.
The increase in the price of fuels that has caused riots throughout the country and that has caused internet cuts has therefore made mining activity in Kazakhstan nullified . The country was a clear destination for miners moving from China: it borders China and is one of the largest energy producers in the world.
2021 has been quite a rollercoaster for bitcoin and the rest of cryptocurrencies.
That in turn has caused a drop in the computing power dedicated to that mining, and is one of the reasons that in recent hours the value of bitcoin has fallen to $ 41,270 according to CoinMarketCap , although at the moment that value is around the $ 42,300.
According to CNBC in Kazakhstan, internet access has already begun to be restored, but data from the NetBlocks Internet Observatory reveal that connectivity levels are 5% of normal .
