Internet blackouts brought in by the Kazakh authorities to help address Kazakhstan’s spreading unrest dealt a severe blow to Bitcoin cryptocurrency mining activity. The overall BTC hashrate fell 13.4% from roughly 205,000 petahash per second to 177,330 petahash per second. In addition, the Bitcoin price dropped 9% following the Kazakhstan blackouts, dropping to a swing low of $42,642.
Following the last year’s exodus of crypto miners from China – where their electricity-draining activities were banned – Kazakhstan currently ranks second in the world in terms of BTC mining hashrate, accounting for around 18% of the network’s hash activity.
Jaran Mellerud, a researcher at Arcane Research, was quoted as saying by FXStreet that in theory, miners could mine without the internet, “but in practice, all the machines in Kazakhstan should be turned off; because of the internet shutdown.”
He added that btc.com estimated that Antpool, Poolin, F2Pool, and Binance Pool witnessed massive reductions in their hashrate when shut the internet down in Kazakhstan. He stated that “these are the pools widely used by Kazakh miners.
Larry Cermak, the VP of Research at the Block, tweeted about the drop in hashrate. However, the Kazakhstan event is unlikely to lead to a decline in crypto prices, he said, adding that “it matters to estimate the impact of an unprecedented event like this.”
Hardware manufacturer Canaan has been looking to expand its crypto mining operations in Kazakhstan. It recently announced that it has deployed over 10,000 AvalonMiner units in the country.
“The curtain just lifted on one of the many mysteries surrounding Bitcoin: How much is being produced using super-dirty coal in Kazakhstan,” Fortune magazine wrote regarding the impact of the Kazakhstan events on BTC mining. “We knew that the Eurasian nation was a major destination for miners and that the refugees recently expelled from China were flocking there.”
“Still, it was difficult to establish how much of all the world’s coins Kazakhstan was minting. Clouding the picture was the government’s recent moves to severely restrict the mining boom that was plaguing its cities via rolling blackouts.”
Meanwhile, the price of Bitcoin tumbled on Wednesday, along with the stock market, as market analysts expect that the US Federal Reserve will raise interest rates soon to fight inflation – though it’s not clear if the two are linked.
News of an interest rate hike came this week after notes from a December meeting of Fed officials were released on Wednesday.
The notes showed that officials expressed concern that inflation was spreading through the economy and could last longer than they previously thought, while positive employment figures meant that low-interest rates might no longer be needed.