Should Bitcoin investors be worried after Kazakhstan’s mining disruption?

Sahana Kiran
Source – Unsplash

Soon after China ousted all things crypto from the country, Bitcoin miners flocked towards Kazakhstan. An array of prominent mining firms viewed Kazakhstan as a hot spot for Bitcoin mining. However, the series of violent protests in the region has got these firms second-guessing their decision.

As the world is in the midst of a deadly pandemic, Kazakhstan was dealing with a crisis of its own. Thousands of citizens were seen venting their rage over surging fuel prices which further caused President Kassym-Jomart Tokayev to declare a state of emergency while sacking his own government. A series of activities followed suit and an internet blackout was one of them.

The connectivity levels dropped to nearly zero following the internet blackout. This move was reportedly made to limit the broadcast of the fierce demonstrations across the country.

Kazakhstan’s internet blackout disrupts Bitcoin hash rate

The internet blackout carried out by the region’s largest telecommunications firm impacted the hash rate of Bitcoin.

Kazakhstan accounts for about 18% of the total hash rate of the overall network. While the country ranks second in the world in terms of Bitcoin hash rate, the onset of these protests caused a 12% drop in the hash rate. Larry Cermak, VP of Research at the Block alerted the crypto community about this decline.

He tweeted,

Cermak, however, urged investors not to panic as it wouldn’t do much to the price of the coin. Citing a similar instance, he said,

“Also just to be clear, I am in no way suggesting this should dump the price. It’s relatively inconsequential but just interesting given that a country that has nearly 20% of HR lost internet for a few hours. Bitcoin survived an overnight 50% HR dump, it will be fine here too.”

Ironically, there was major bloodshed in the crypto market. Bitcoin, during the time of writing, was plummeting by 6.99% while its price dipped down to $43,161. This was further noted to be the lowest that BTC had dropped, since December’s crypto carnage.

Earlier this week, Canaan Inc a prominent crypto mining firm dived into the Kazakhstan market and deployed over 10,300 AvalonMiner units. Canaan had a prominent hold over the Chinese market, but China’s big crypto crackdown caused the departure of serval crypto firms. The latest catastrophe in Kazakhstan could once again bring a major loss to the mining firm.