Bitcoin mining operations in Kazakhstan halted Thursday, January 6 due to internet and telecommunication shutdowns amidst intensifying political unrest. However, the administration of incumbent President Jomart Tokayev claimed that everything is now under control.
The second-largest Bitcoin hub in the world took a hit after anti-government protests took a sour turn during the first week of January. Protests escalated to violent political unrest amidst the country’s fuel price crisis which forced the authorities to shut down the internet in several regions.
Alan Dordiev, the head of the Kazakh National Association of Blockchain and Data Centre Industry, said that the situation is almost resolved as reported by CoinDesk. Although interruptions are still taking place in other parts of the country, internet connectivity is largely restored.
Crypto mining regions are ‘totally fine’, Dordiev added.
An estimate of 15% of the world’s Bitcoin miners suddenly went offline during the internet shutdown, according to a report by CNBC. This led to a 12% fall in the global Bitcoin hash rate.
The events also contributed to Bitcoin’s price falling from US$49,000 during the last week of 2020 to US$42,000 by January 6. This is the biggest recorded downfall of the leading crypto asset since September of the previous year.
‘No internet, no mining’
Kazakhstan became a large contributor to the Bitcoin ecosystem amidst China’s crypto crackdown. At the time, a lot of miners went to the Central Asian country to set up shop for their mining operations.
With the internet shutdown, Bitcoin’s global computational power decreased. Miners need internet connectivity to successfully mine the blockchain using high-powered computers. The greater the number of miners connected to the network, the higher the hash rate is for the blockchain.
In a statement provided by a Kazakh miner named Didar Bekdau to CNBC, no internet access means no mining for the industry.
Although network access has been restored, these moments are ‘brief and unpredictable’ according to Internet watchdog NetBlocks. This affects different regions in the country at different times, thus an unreliable network to support crypto mining, said Alp Toker, NetBlocks founder.
Aside from the intermittent internet connection, Kazakh miners are also facing electricity restrictions. Since September, the country’s power grid has struggled to keep up with the increased demand caused by mining activities. Some companies including BitFuFu and Xive have shut down operations and sought refuge in other countries with better energy resources like the US.
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