Global Bitcoin hashrate collapses after Kazakhstan cuts the country’s internet

Why is this important: Today, many people only know Kazakhstan as the homeland of the fictional character Borat, but it is also one of the biggest Bitcoin mining nations. The country’s importance to the crypto world was illustrated this week when the overall BTC hash rate fell 13.4% after the Internet shutdown in Kazakhstan amid widespread protests and violent clashes between protesters. and authorities.

Research conducted last year by the Cambridge Center for Alternative Finance showed that Kazakhstan had become the second-largest Bitcoin mining center after China severely cracked down on the industry. The country was responsible for 18% of all Bitcoin minings in August – that figure stood at 8% before China started hammering crypto.

The scale of Bitcoin’s mining operations in Kazakhstan became apparent this week when, after protests over the sharp rise in fuel prices led to widespread unrest, a “nationwide internet blackout” was put in place to disrupt protesters’ communications.

“I guess some geeks would say that in theory you can mine without the internet, but in practice all machines in Kazakhstan would have to be shut down due to the internet shutdown,” Jaran Mellerud, researcher at Arcane, told CoinDesk. Research.

With so many miners cut off from the Bitcoin network, the overall BTC hashrate has increased from around 205,000 petahash per second to 177,330 petahash per second.

Btc.com estimates that Antpool, Poolin, F2Pool, and Binance Pool saw significant reductions in their hashrates around the same time the internet in Kazakhstan was shut down. According to Mellerud, swimming pools are widely used by Kazakh miners.

The price of Bitcoin has also plunged since the power outage in Kazakhstan, from around $ 46,000 to $ 41,000.

It is estimated that more than 87,849 energy-hungry mining rigs were moved from China to Kazakhstan following the crackdown on the former, attracted by the low electricity prices of the former Soviet state. Reports indicate that the demand for electricity in Kazakhstan increased by about eight percent last year, an increase that has led to power shortages, power outages in six regions of the country since October and shutdowns. of three power plants.

Power grid operator KEGOC announced in 2021 that it would ration electricity to 50 registered crypto miners. They will also be the first to be disconnected in the event of a network failure.

Kazakh officials said much of the increase in power consumption is the fault of “gray miners,” unregistered crypto miners who operate from homes or from factories. They are estimated to be the source of 1,200 megawatts (MW) of electricity from the country’s power grid. Combined with the 600 MW of energy consumed by “white” miners, mining accounts for 8% of Kazakhstan’s total energy consumption. This year, registered miners will be charged a compensation fee of 1 tenge (approximately $ 0.0023) to remedy the situation and identify illegal miners.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Trending this Week