After the news about nationwide protests in Kazakhstan Causing Internet blackout in Bitcoin Mining country that has led to a significant drop in the hash rate, cryptoslite Talk to Alan Konevsky, Chief Legal Officer at PrimeBlock.
PrimeBlock is a digital asset miner and infrastructure provider, currently operating close to 1,000 PH/s in hash capacity, equivalent to about 0.6% of the total global Bitcoin hash rate – with mining facilities spread across the US and Canada.
Konevsky commented on recent developments in Kazakhstan and Kosovo, shedding some light on their impact on the industry, from an internal perspective.
Developing countries are struggling to keep up
Aside from cryptocurrency mining, developing countries such as Kazakhstan and Kosovo have limited electrical grids – unable to handle the high demand.
“Infrastructure for power generation and distribution is often a weak point,” Konevsky said, referring to the bottleneck facing developing countries struggling to keep pace with technological advances.
“Political instability feeds and flows from these conflicts and exacerbates their impact and duration,” he explained.
At the end of last year, Central Asia – from western Kazakhstan to southern Tajikistan –suffer From a lack of energy and energy after experiencing a severe drought, which limited the production of hydroelectric power, and as a result – bitcoin mining.
In November, the Kazakhstan Electricity Grid Operator Corporation (KEGOC) explained that the problems were caused by malfunctions, but also by system overuse – which is caused by the government attributed Crypto miners flocked To Kazakhstan from China.
“Somewhat similarly, the largest coal-fired power plant in Kosovo was recently closed due to a technical problem, so they had to import electricity, which is already on an upward trend in prices,” Konevsky commented.
Facing the worst energy crisis in a decade due to production cuts, the Kosovo government recently export A blanket ban on cryptocurrency mining – in an effort to reduce electricity consumption.
Konevsky noted that “in the grand scheme of things, these countries’ decisions to limit mining do not so much reflect their feelings toward blockchain and cryptocurrencies as much as their status as developing countries with advanced infrastructure,” adding that “this is challenging enough for them to provide for basic needs.” and support economic growth.
What does this mean for miners in North America?
According to Konevsky, North American bitcoin miners are indirectly affected by these decisions in a number of ways — some quite positively.
“First, less hashing power in the network means more room for North American miners to increase their stake in the network,” he began explaining.
Second, mining companies, including those that relocated after regulatory changes in China, are set up in countries like Kazakhstan and Kosovo because the cost of electricity is much cheaper than in North America. If mining becomes completely non-starter in these countries, we could see miners relocate instead of stopping operations, eliminating the loss of hash power.”
Third, the decisions made by these countries could set a precedent that other countries could follow. If other developing countries decide to restrict or ban bitcoin mining, it could change the bitcoin mining landscape as a whole.”
The future of competition
“This industry is mobile, to some extent” Konevsky noted, commenting that as the bitcoin mining industry matures, a stable political climate and stable inputs will play a crucial role.
Similar to other developing industries, “as companies seek to expand in the face of equipment and energy hurdles and dealing with asset price movements and other market challenges” – horizontal and vertical consolidation are expected.
As he explained, “Putting shares public is a great way for crypto companies to raise funds, gain more legitimacy, and even gain access to new markets through increased financial firepower.”
“Large miners have the resources and scale to weather market volatility,” Konevsky explained, given their ability to afford new equipment when prices are high and rent or buy space in data centers.
“On the other hand, small miners may not be able to survive if the bitcoin price drops too much or if they can’t compete with big miners,” he noted, adding that in the long run – “it will always be competition between miners.”
Although he couldn’t reveal specifics about the company’s plans for 2022, Konevsky emphasized that PrimeBlock is well positioned to meet market challenges.
He explained that the company’s strategy is to focus on locations that have surplus electricity, adequate space, cost and regulatory standards.
“We have the latest mining equipment, the best partnerships, a scalable and smart strategy not based on long-term development projects, and a team of experienced professionals,” he concluded, adding that PrimeBlock is well-equipped to meet the challenges of the developing country landscape.
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