TL;DR Breakdown
- Major Bitcion mining pools have recovered almost 9% as internet is restored in Kazakhstan.
- There are growing allegations of human rights violation and social media outrage against the government.
- Crypto miners are looking beyond Kazakhstan for a more sustainable solution to mining.
The ongoing Kazakhstan protest has been hurting the Bitcoin mining industry for almost a week now. Bitcoin prices plunged below $45k for the first time in months on January 6th, after the Kazakh government announced a nationwide internet shutdown.
Kazakhstan is the second biggest Bitcion mining hub in the world, only trailing the US. So, when the whole country was offline, the hashrate of all major Bitcion mining pools fell by 11%. This was a major disruption of the BTC supply chain because over 18% of global Bitcoin miners are in Kazakhstan. The country became a major hub for crypto mining after China’s ban.
Since yesterday, the country’s internet has been partially restored and all mining stations are now online. Although internet connection remains limited in Almaty, the country’s capital, all other Bitcion mining regions are fully up and running. The hashrate across all major mining pools have recovered almost 9% today, and BTC supply might be back to its usual capacity within the next 24 hours.
A cloud of humanitarian concerns in Kazakhstan
As much as we’d like, sometimes it’s impossible to separate crypto from politics. Fundamentally, crypto is a decentralized digital asset, but the market is hugely influenced by everything that happens within the centralized institutes.
Although Bitcion mining is finally online, there are several claims of forceful violence against the Kazakh citizens for the past week. Almost 8,000 people have been detained and over 150 have died in the ongoing protest against rising fuel prices. Social media is filled with outrage from communities, blaming the Kazakhstan government and the Russian troops for violently cracking down on innocent protesters.
The Kazakh situation will go down in the history of Bitcion as a ‘dark day for crypto mining’, but it should also be remembered as a ‘dark day for humanity’. No matter which side is right or wrong; when human lives are lost there are no winners.
Even though BTC supply is recovering for now, we have to look forward to Kazakhstan’s recovery as a whole. Any continuous disruption will not only harm the crypto industry but will also critically harm the country’s population and its communities.
Miners have to look beyond Kazakhstan for a sustainable solution
Although Kazakhstan has been a haven for crypto miners after China’s ban, the continuous civil unrest in the country is a critical threat for miners. Having the second-largest mining hub in such a politically unstable region is like having a ‘centralized killswitch’ for Bitcion. Miners in the country are also facing economic challenges due to its increasing electricity prices.
Other country’s like Thailand can be a more sustainable solution for crypto miners. Thailand is already on-track for legalizing crypto mining in 2022, according to top financial experts. Miners could also look to shift their hub to the US, which is still the biggest region for BTC mining in the world.
Bitcoin prices are still trading below the $43K support zone, as the bear market continues.
