Crackdown in Kazakhstan hits crypto miners
Kazakhstan’s recent internet shutdown in a deadly uprising hit the country’s growing cryptocurrency mining industry.
As a result, the global computing power of the bitcoin network has dropped sharply.
Tom Wilson, Reuters cryptocurrency correspondent:
“So it’s fair to say that cryptocurrencies as a whole are becoming more sensitive to geopolitical factors than before.”
Kazakhstan became the world’s second largest bitcoin mining center after the United States last year
This was after China’s main hub clamped down on crypto mining activity.
As with everything in the cryptocurrency world, bitcoin mining is a rather opaque industry … That said, a Cambridge University report last year showed that in August Kazakhstan accounted for about 20% of the global bitcoin computing power. It’s up about eight percent in April, so there is a fairly rapid increase in the number of cryptocurrency miners in Kazakhstan. ”
Bitcoin and other cryptocurrencies are created or “mined” by powerful computers.
In different parts of the world, large data centers compete to solve complex mathematical puzzles in a very power-intensive process.
âLast year, China, which was the world’s largest cryptocurrency miner, launched a pretty sweeping crackdown on cryptocurrency mining. And that means many mining companies have fled China for other countries with cheap electricity. In Central Asia, Kazakhstan is one of the places. ”
A recent uprising in Kazakhstan began with protests against rising fuel prices on New Year’s Day.
On January 5, the internet was shut down across the country.
The move likely prevented Kazakhstan-based miners from accessing the bitcoin network.
âAnd with the internet shut down on Wednesday, the global computing power of bitcoin has dropped quite dramatically. In theory, this makes it easier for miners to produce bitcoin, and it could lead to more bitcoin on the market in the future, which in theory would put downward pressure on bitcoin prices. ”
On January 7, bitcoin fell 5% to its lowest level since late September, falling to less than $ 41,000 amid a broader sell-off in cryptocurrencies.
Security forces appear to have reclaimed the streets of Almaty, Kazakhstan’s main city, after days of violence.
âAnd it’s still not clear exactly how much geopolitical factors are really fueling this, but we can see from what has happened in Kazakhstan recently and also with the broader crackdown on cryptocurrencies by China. last year, that the attitude of governments and financial regulators towards cryptocurrencies can really impact the cryptocurrency markets. ”