Kazakhstan, the central Asian nation, plays a key role in the oil and gas as well as cryptocurrency mining sectors. After a crackdown on cryptocurrency activities in Sichuan province in China not too long ago, many crypto miners moved their operations to Kazakhstan. Political unrest and chaos, along with an internet shutdown, have resulted in a steep price decline for Bitcoin. For the first time since September 2021, Bitcoin is trading below $43000.
Kazakhstan’s political unrest was triggered due to surging fuel prices in the country, resulting in major problems the country has faced in decades. President Kassym Tokayev not only sacked his government but also requested the aid and presence of Russian paratroopers. The internet shutdown left 15% or more of bitcoin miners worldwide offline. According to industry insiders, the fall in Bitcoin prices had more to do with Fed function and a bit of off-risk behavior. Even though internet connectivity was restored for a brief period in Kazakhstan, connectivity levels are still not back to full capacity.
This episode has highlighted two key facts related to the cryptocurrency mining industry. For one thing, it shows that bitcoin’s network is resilient and keeps working even if many miners abruptly go offline. The second is that the US will see a new influx of cryptocurrency miners who want to avoid any more work disruptions. The only question is whether the US has room for new miners. The US has overtaken China as the biggest mining hub for bitcoins in 2021. There is a huge demand for hosting capacity.
