The nation of Kazakhstan faces a rather abrupt and unprecedented blackout with seemingly no light at the end of the tunnel. There is no certainty as to when normalcy will return. Kazakhstan is often touted as the second-largest contributor to Bitcoin mining and played an important role in Bitcoin reaching its all-time high hash rates. The recognition is not without merit since it accounts for 18% of the Bitcoin network’s hash activity. The country’s dirt cheap energy prices have been a beacon for domestic and foreign companies to set up shop for bitcoin mining.
On Wednesday, however, the country was the center of sudden and severe political unrest, owing to an unprecedented increase in the price of fuels. This resulted in the resignation of the country’s erstwhile government. But before any placatory measures could be put in place, in a reactionary retaliation, the state-owned Kazakh telecom shut down the nation’s internet. It caused network activity to plummet to 2% of what they tend to reach on a daily basis. This was severely detrimental to the global Bitcoin mining industry. As a result, the overall hash rate declined sharply in the hours after the shutdown, over 13%, according to some estimates.
The context of it was that the Kazakh government removed all existing price caps on fuels, including LPG. LPG is primarily used as a vehicular fuel in Kazakhstan. Left to the mercy of market conditions, the fuel prices doubled overnight. As a consequence, this sparked violent protests across the country, putting immense pressure on the authorities, who were seemingly not prepared for civil unrest of such magnitude.