Bitcoin [BTC] network power plummets after the Kazakhstan administration imposed a nationwide internet shutdown following protests owing to a sudden sharp increase in its gas prices. It is to be noted that Kazakhstan became the world’s second-largest bitcoin mining center after the United States, as per a study conducted by Cambridge Centre for Alternative Finance, following China’s clampdown on crypto mining rigs in 2021.
The riots which began on 2nd January 2022 escalated leading to a sporadic internet shutdown after violence spread across the tightly controlled former Soviet state. The public ban on Wednesday prompted monitoring site Netblocks to term it as “a nation-scale internet blackout”. The move likely prevented Kazakhstan-based miners from accessing the bitcoin network.
In accordance with the most recent data available, Kazakhstan accounted for 18% of the global “hash rate” – crypto lingo for the amount of computing power required to mine BTC. In April last year, before China’s latest crackdown on bitcoin mining, the figure was just 8%. Kazakhstan’s crypto mining farms are mostly powered by aging coal plants that are causing a lot of concern for authorities as they seek to decarbonize the economy.
The Kazakh government said previously it planned to crack down first on unregistered “grey” miners which the government estimates might be consuming twice as much power in comparison to the “white” or the officially registered ones. Having said that, the decrease in the computational power has not reflected positively in Bitcoin price action.
Bitcoin 2022 off to a shaky start?
Bitcoin 2022 journey seems to start on the wrong foot. In addition to the Kazakhstan crisis that spurred a massive sell-off, the hawkish stance of the US Federal Reserve and the ongoing scare surrounding the Omicron variant of COVID-19, have all caused the dominant cryptocurrency to ‘trudge through the mud’ this week.
The price crash this week was triggered by a couple of factors. For instance, the US Federal Reserve’s December minutes raised the possibility of an interest rate hike as early as March. BTC trading activity as of January 4th, 2021 also took a hit due to a drop in enthusiasm. At press time, the king coin’s price is trading at $41,978 – nearly 40 percent down from its all-time high of $69,000, charted a couple of months last November.