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Bitcoin Mining Collapses Due to Protests in Kazakhstan

After ban in China, Kazakhstan became an important center of bitcoin mining. The situation has the potential to cause a global disruption in the crypto market, as Kazakhstan is home to nearly one-fifth of the world’s bitcoin hashrate. Major pools, such as F2Pool, AntPool, and ViaBTC, also saw declines of 12.8%, 11.6%, and 19.2%, respectively.

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On Wednesday, January 5th, the Kazakh government took the step of shutting down the internet nationwide. The decision was probably made so that protesters cannot communicate with each other. Previously, there were violent protests against rising fuel costs and economic problems, with civil war-like conditions prevailing in parts of the country. However, since the country is one of the most important centers for bitcoin mining, the hashrate plummeted massively due to the decision.

Kazakhstan is currently responsible for about 18% of the world’s hashrate in Bitcoin mining. The impact of the internet shutdown today caused an estimated 12% drop in the hashrate. Crypto analysts have spoken out on Twitter, releasing data that illustrates the impact of the shutdown on the mining industry.

Charts show a drop in rates for numerous mining pools. The most affected are 1THash (down 82%), OKExPool (down 46.3%), and KuCoinPool (down 22.7%).

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After ban in China, Kazakhstan became an important center of bitcoin mining

The situation has the potential to cause a global disruption in the crypto market, as Kazakhstan is home to nearly one-fifth of the world’s bitcoin hashrate. That was estimated just last fall by the Cambridge Centre for Alternative Finance. Major pools, such as F2Pool, AntPool, and ViaBTC, also saw declines of 12.8%, 11.6%, and 19.2%, respectively.

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News of Kazakhstan’s decision first broke on Wednesday. The media initially reported that there were difficulties in using mobile messaging services. But after that, Internet access was likely further restricted.

Despite the impact of the ban, the hashrate has not yet reached the level of the dramatic drop last year. At that time, China had completely banned the mining of Bitcoin and other cryptocurrencies. China’s mining industry had long been the largest and technologically dominant in the world before that.

Still, the ongoing crisis in Kazakhstan, which shows no signs of resolution, is the latest obstacle for miners who have moved to the country hoping for an easy ride after China’s crypto ban. Kazakhstan’s President Kassym-Jomart Tokayev has promised another crackdown on the protests, declaring a nationwide state of emergency.

As reported back in November, the country’s limited energy supply led to restrictions on crypto miners. This is due to the fact that bitcoin mining consumes large amounts of energy. However, efforts to grow the industry in Kazakhstan took shape, and by this month, more than 100 mining companies had been officially registered.

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(Featured image by Marco Verch Professional Photographer CC BY 2.0 via Flickr)

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J. Frank Sigerson is a business and financial journalist primarily covering crypto, cannabis, crowdfunding, technology, and marketing. He also writes about the movers and shakers in the stock market, especially in biotech, healthcare, mining, and blockchain. In the past, he has shared his thoughts on IT and design, social media, pop culture, food and wine, TV, film, and music. His works have been published in Investing.com, Equities.com, Seeking Alpha, Mogul, Small Cap Network, CNN, Technology.org, among others.