Kazakhstan Bitcoin Miners Cannot Access Electricity
Since early January, Kazakhstan has been experiencing serious unrest, initially fomented via protests against a hike in gas prices. Since that time, the situation has become worse, leading to the deaths of several protesters. The current climate of unrest in the central Asian nation has affected bitcoin miners operating in the country. To restore a degree of calm, Kazakhstan President Kassym-Jomart Tokayev sent in Russian paratroopers to restore some stability.
President Tokayev has directed the shutdown of Internet services across the country. As expected, this action has adversely affected local bitcoin mining activities. Meanwhile, the Kazakhstan government has gone further–opting to cut off the electricity supply for BTC miners, from January 24 to January 31, 2022.
While there is no definite date when authorities will reconnect the miners, KEGOC, the national grid operator, said that things will go back to normal when the energy situation improves.
After the Chinese crackdown on BTC mining in 2021, many miners moved to friendlier countries like the United States and Kazakhstan. As of August 2021, the central Asian nation accounted for 18% of the global BTC mining hashrate, putting the country in second place after the U.S.
Following the influx of miners, Kazakhstan began to experience electricity shortages, which was unusual for a country with abundant energy. The government has been quick to blame this development on increased mining activities. It is now likely that Kazakhstan, which became one of the top preferred destinations for bitcoin miners, might begin to witness an exodus of BTC miners.
The Battle for Bitcoin Mining Supremacy
Beijing’s crypto mining crackdown of last year triggered a significant East–West migration of hashing power. Bitcoin hash rate activity suffered massive declines–while mining difficulty greatly increased–as Chinese miners turned off their equipment. (Hash rate refers to the total computing power used to secure the network at any instance of time, while difficulty refers to the measure of ease with which miners can solve the cryptographic problem required to mine a block on the network.)
The United States and Russia have become significant beneficiaries of China’s crypto mining ban. Kazakhstan lies between both countries in terms of hash rate control and it is not unlikely–given what we have seen with Chinese restrictions–-that a ban in Kazakhstan could force more participants to these two competing countries.
North America has become a major bitcoin mining destination, with several major companies like Bitfarms, Riot, and Marathon recently embarking on massive expansions of their capabilities. These mining outfits are also holding large amounts of BTC on their corporate treasuries.
Meanwhile in Russia, the country’s central bank continues to push for a ban on cryptocurrencies as well as a curtailment of mining. However, President Vladimir Putin recently countered the Bank of Russia’s position.