Kazakhstan's Internet Shutdown Fuels Bitcoin Hashrate Drop
On Wednesday, Kazakhstan’s government made the bold move to cut off internet access. The decisions made as protests around fuel costs and the economy are on the rise, and the country’s bitcoin mining operations appear to be caught up in the tension.
Kazakhstan currently holds around 18% of Bitcoin’s hashrate and the impact of the internet shutdown has so far caused a 12% hashrate drop. Crypto analysts have shared their views on Twitter, revealing charts that outline the major effect that the shutdown has had on the crypto giant.
Many charts indicate a decline in rates for numerous mining pools. The most significantly impacted are 1THash (82% decline), OKExPool (46.3% decline) and KuCoinPool (22.7% decline).
The situation has the potential to cause global crypto disruption, given that Kazakhstan is home to almost ⅕ of the world’s bitcoin hashrate. This was estimated last fall by the Cambridge Centre for Alternative Finance. Major pools including F2Pool, AntPool and ViaBTC also saw declines of 12.8%, 11.6% and 19.2%.
The news of Kazakhstan’s decision was first unveiled on Wednesday. News outlets initially claimed that the Kazakh government had moved to halt the country’s internet access. According to British paper, The Guardian, this followed tightened access to mobile messaging platforms which further restricted internet users.
Despite the effects of the ban, the hashrate impact is yet to reach levels that were seen from the dramatic drop that occurred when China moved to ban the country’s Bitcoin mining ecosystem. China’s ecosystem had long been the world’s largest and most technologically dominant.
Still, the ongoing crisis in Kazakhstan, which shows no signs of a resolution is the latest barrier for miners who moved to the country in hopes of an easy ride after China’s crypto ban. Kazakhstan’s president Kassym-Jomart Tokayev has pledged a further crackdown on the protests and has also declared a country-wide state of emergency.
As first reported by Bloomberg in December, limited energy supplies in the country led to restrictions for power-seeking miners. This is because crypto mining uses large amounts of energy. However, efforts to grow the industry within Kazakhstan were taking shape, with more than 100 mining businesses registered with the government as of this month.