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Kazakhstan’s crypto mining industry takes a plunge

The crypto mining industry in Kazakhstan, known as the second largest in the world, recently took a plunge in January 12 due to the power cuts caused by the current political turmoil in the country.

Violent clashes between the army, protesters and the police shocked Kazakhstan in January 5, causing the government to shut down the internet all throughout the nation for six days in hopes of disrupting the protestors and disabling their communication channels. 

With the country hosting 18% of Bitcoin’s global mining capacity, this incident caused Bitcoin’s computational power to dramatically decrease, negatively affecting its price and transaction speed. The Guardian reported that the hash rate for major crypto mining pools reached a 14% descent ever since the power cut in Kazakhstan. The price of Bitcoin also plummeted to $43,000 on January 6.

According to an article published January 12 on Wired, a cryptocurrency news channel, the plunge in Kazakhstan’s crypto mining industry could mean that the mining farms might stop working during peak hours when most of the country’s population turns on their heating, thus dividing power allocation.

Didar Bekhauov, founder of another crypto mining company told Wired in an interview that the power providers sometimes cut off the electricity to the mining farms and this could be a problem for the miners and the crypto users. Didar added that he is ‘hopeful that the problem would pass after the Winter season.’ 

Numerous miners moved to Kazakhstan last year after China’s hasty ban of the crypto mining industry in June 2021. Located near both China and Russia, it has cheap electricity costs and a cold climate that prevents machines from overheating, creating the perfect environment for mining.

According to a report published by Financial Times on July 15 last year, over 87,849 crypto mining machines were transferred to Kazakhstan ever since the ban on China was implemented. This made Kazakhstan one of the biggest crypto mining countries in the world. 

However, miners are now considering relocating though they are currently stranded as political unrest in the country continues and Russian troops roam the streets, preventing them from leaving. 

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