Kazakhstan’s Bitcoin mining closed in deadly protest

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This week, the turmoil in Central Asian country Kazakhstan made Internet shutdown the second biggest problem in the world. Bitcoin Yet another blow to mining hubs, miners looking for a permanent and stable home.

In less than a year, China expelled all crypto miners, many of whom sought refuge in neighboring Kazakhstan. But months after these crypto immigrants opened their stores, protests against soaring fuel prices The worst anxiety the country has seen in decades, Leave the crypto miner caught in the middle.

After dismissing his government and demanding the help of Russian paratroopers to contain the deadly violence, Kazakhstan President Kassym-Jomart Tokaev ordered the country’s telecommunications provider to shut down Internet services. According to Kevin Zhang of digital currency company Foundry, the shutdown has allowed an estimated 15% of the world’s Bitcoin miners to go offline and bring over $ 400 million in mining equipment to North America.

As Kazakh miner Didal Bekbau said, “There is no internet, so there is no mining.”

Bitcoin Trading on Thursday fell below $ 43,000 for the first time since September, and at one point fell below 8%.

Internet service has been temporarily restored in Japan, Data from the monitoring group NetBlocks Internet Observatory shows Its connection level is flat at only 5% of normal levels across the country.

“Now on Friday morning in Kazakhstan, the Internet has been shut down for about 36 hours, putting public safety at risk and leaving friends and family blocked,” NetBlocks wrote in a tweet.

Throughout the episode, two important facts about the state of the Bitcoin mining industry were revealed. For one thing, the Bitcoin network is resilient in that it does not skip beats even if a significant portion of the miners unexpectedly go offline. Second, the United States may soon see a new influx of crypto miners trying to avoid future turmoil.

Kazakhstan law enforcement officers blocked the streets on January 5, 2022, during a protest caused by rising fuel prices in Almaty, Kazakhstan.

Pavel Mikheyev | Reuters

The question now is whether the United States, which surpassed China as the world’s largest Bitcoin mining hub in 2021, has room to accept more miners.

“The concern is that the previous congestion and bottlenecks in terms of hosting capacity (the space immediately available to connect machines) will be much more severely limited,” explains Zhang.

“There is tremendous pressure and demand for hosting capacity,” he said.

Bitcoin mining in Kazakhstan

Kazakhstan looked like a logical destination when Beijing expelled all Bitcoin miners in May 2021. Beyond the fact that it was right next door, the country is also a major energy producer.

Mining is an energy-intensive computing process used to create new coins and keep logs of all transactions. Kazakhstan has a coal mine that provides cheap and abundant energy. This is a great incentive for miners competing in low-margin industries where variable costs are usually energy only.

Also, the Kazakh government can usually take a looser attitude towards buildings. This is suitable for miners who need to build physical equipment in a short period of time.

Bekbau operates Xive, a company that provides hosting services to international miners and sells the specialized equipment needed for the mining industry. Over the past few months, he has dealt with countless inbounds from Chinese miners looking for a safe place to connect their gear.

Kazakhstan is slightly behind the United States in terms of its share of the global Bitcoin mining market, accounting for 18.1% of all cryptocurrency mining. Cambridge Alternative Finance Center..

But the government isn’t exactly excited about the fast-growing crypto mining industry.

For months, Kazakh lawmakers have set new rules to discourage the mining industry. Law This will introduce additional taxes on cryptocurrency miners from 2022. Experts expect this move to significantly change the incentives for those seeking to expand capital within Kazakhstan.

Nick Carter, co-founder of Castle Island Ventures, said:

“These bans emphasize why miners are increasingly placing themselves in politically stable jurisdictions,” Carter continued.

Some mining experts have also told CNBC that Kazakhstan always considers it a temporary stopover for longer migrations to the west.

Alex Brammer of Luxor Mining, a cryptocurrency pool built for senior miners, said large miners will go to Kazakhstan in the short term with old equipment.

“But as older generation machines reach the end of their useful life, they are likely to deploy newer machines in more stable, energy-efficient and renewable jurisdictions,” Brammer said.

The United States has rapidly become a mecca for cryptocurrency miningPartly because there are some of the cheapest energy sources on the planet, many of which tend to be renewable.

If miners move west, they could usher in a greater debate about Bitcoin’s carbon dioxide emissions.

As Kazakhstan’s energy consumes large amounts of carbon, Carter said a long outage in Central Asian countries, like China’s ban, will have the net effect of further decarbonizing Bitcoin mining. It points out that it is likely.

However, not everyone is convinced of the imminent outflow of cryptocurrency mining from Kazakhstan.

Alan Dorjiyev is Chairman of the National Blockchain and Data Center Industry Association of Kazakhstan and its members are primarily composed of mining companies. After talking to mining farm owners across the country, Dorziev told CNBC that he understands that most data centers are safe because they are in a protest-free area.

Baekbau is also optimistic and tweeted that he is looking forward to it by next week. “Everything will be fine.”

Whether or not miners move from Central Asia, industry experts told CNBC that the biggest point of the whole challenge is the fact that Bitcoin mining survived another stress test with little drama. I’m talking.

“”As we saw in China, if a country shows instability in Bitcoin mining, the miners in that country will move elsewhere, “said the Bitcoin mining engineer who currently runs Meow. Brandon Alvanagi says.

“This is how the Bitcoin network becomes more resilient over time. Miners move towards the most favorable jurisdictions and less mess.”

Kazakhstan’s Bitcoin mining closed in deadly protest

Source link Kazakhstan’s Bitcoin mining closed in deadly protest

The post Kazakhstan’s Bitcoin mining closed in deadly protest appeared first on Eminetra.

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