Kazakh government quits, shuts down internet amid protests, drops Bitcoin network hash rate by 13.4%

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Kazakhstan, the second largest country in the world in Bitcoin (BTC) mining hash rate on Wednesday, experienced unprecedented political unrest due to a sharp increase in fuel prices. As a result, the country’s presidential cabinet resigned, but not before the state-owned Kazakhtelecom company shut down the country’s internet, causing network activity to drop to 2% of daily levels.

The move dealt a severe blow to Bitcoin mining activity in the country. According to data compiled by YCharts.com, the overall Bitcoin network hash rate declined 13.4% in the hours following the shutdown, from around 205,000 petahash per second (PH / s) to 177 330 PH / s. The country accounts for 18% of Bitcoin network hashing activity.

Days earlier, the Kazakh government lifted price caps on liquefied petroleum gas used for motor fuel in order to align with market conditions, which doubled its price overnight, sparking violent protests. At the time of publication, the Internet remains inaccessible in Kazakhstan. If extended, the consequences could be severe outside of internet services, the Data Center Industry & Blockchain Association of Kazakhstan expects the country to generate $ 1.5 billion in legal cryptocurrency mining (and An additional $ 1.5 billion in illicit activity) over the next five years.

The country’s low energy prices have prompted domestic and foreign entities to settle for Bitcoin mining. According to world oil prices, electricity in Kazakhstan costs an average of just $ 0.055 per kWh for businesses, a fraction of the $ 0.12 per kWh paid by US businesses.

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