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As Kazakhstan’s government claims that the country’s energy services are stabilizing, Bitcoin’s hash rate may be on the way to recovery. However, is the situation stable enough for bitcoin mining yet? Will it ever be?
Just a few days after the bitcoin hash rate reached an all-time high, thus recovering from the Chinese ban on cryptocurrency mining, another authoritarian crisis hit the bitcoin mining industry in Kazakhstan, sending hashrate down 15% in 10 days.
The country has been the second largest bitcoin mining site (after the US) with 18% of the global BTC hashrate since miners in China were forced to find new sites with cheap energy costs.
Parallel to the downward movement of the cryptocurrency market, the price of Bitcoin fell on Friday the 7th to $41,000 while currency mining in Kazakhstan turned dark as the government imposed power and internet cuts to control growing protests, which turned violent.
Protesters have reportedly expressed anger over the new fuel price hike.
The news was reported all over the place without being completely sure of what was going on. Borders, the Internet and other means of communication are blocked, so that information does not reach the world so easily.
The latest reports had shown that the uprising had been tamed as Russian President Putin stood proudly as a military ally who dispatched paratroopers last week. Show strength through strength.
Reuters reported that President Kassym-Jomart Tokayev described it as an “attempted coup”. He claimed that “it turned out that the main goal was to undermine the constitutional order and seize power.”
Both countries referred to the uprising as an outside-backed rebellion, and failed to pin the blame on someone – or somewhere – specifically.
“The old man came out!” It was the protesters’ favorite chant, referring to the former Nazarbayev who still retains power.
“We are ordinary people. We are not terrorists!!” read a banner of 40 activists.
Related reading | Could Kazakhstan’s turmoil cause another Bitcoin hash to crash?
Is the crisis over?
The government issued “shoot to kill” orders.
In short: No, the real crisis cannot end. However, the violence could have stopped.
Reportedly 164 people (3 children) were killed, more than 2,000 were injured and 7,939 people were arrested.
“The violence was by far the worst in the country since independence from the Soviet Union in 1991.” The Telegraph reported
“A man who ventured outside to find food was shot dead, according to reliable reports, and a Kazakh media group said one of its drivers was killed.”
It was not just a shutdown of the Internet: there was no way to buy food, the banks were closed in the center of Almaty, the exit was so dangerous that even ambulances were afraid to work after the 7 pm curfew.
It was not just about fuel price hikes that, as a British newspaper reported, citizen despair also came from “frustration with economic stagnation, disgust with elite corruption, and anger at the deteriorating state of social services and healthcare despite Kazakhstan.” Oil and Mineral Resources.
The Kazakh National Security Committee claimed that the situation was “stabilized and under control” and declared the date a day of mourning.
However, others report that the protests are entering a second week.
Bitcoin mining in Kazakhstan
Regarding miners, the government intends to tighten rules and introduce additional taxes from this year.
Currently, reports are showing mixed signals about the impact of these events on the industry.
An analysis by CoinDesk using data from the BTC.com mining pool claims that the lost Bitcoin hash rate for the most important mining pools has been nearly recovered, narrowing the loss to 2.2%.
Data from BTC.com shared by CoinDesk
The portal reports that Alan Dordjiev, head of the Kazakh National Association of Blockchain Industry and Data Center, has told them that the situation is “almost resolved” and that despite the power outages, the cryptocurrency mining areas are “absolutely fine.”
However, internet monitoring company NetBlocks reported a new blackout:
NetBlocks Research Director of Internet Screen Isik Mater told Forkast that the country’s restorations are “limited, unpredictable, and do not meet the requirements for stable connectivity needed for cryptocurrency mining or blockchain applications,”
The current hash rate measured by Blockchain.com reads 176 EH/s, still far from 208 million EH/s ATH on January 1 – but not a risk.
Miners in Kazakhstan were facing energy constraints. They may have already begun to set their sights abroad, and after the service has stabilized, the current situation is unlikely to make them feel safe and welcome.
Related reading | Bitcoin Hashrate nears new ATH, what does that mean for the price?
Bitcoin value has fallen more than 19% in the past two weeks, current price at $41,613 on the daily chart | Source: BTCUSD on TradingView