Political tensions are rising amid the energy crisis in Kazakhstan, and people are revolting. As the number two Bitcoin mining country by hashrate, what happens in Kazakhstan could have multiple repercussions for the Bitcoin network.
Tuesday, the Kazakh government resigned after 3 days of violent protests centered around increases in the standard of living and a doubling in the cost of gasoline. Bitcoin mining pool API feeds immediately showed a drop in overall hashrate. Some 18% of the total network hashrate stands at risk, although estimates and information remain questionable.
Bitcoin mining pools show a drop across the board, according to BTC.com. The severity of a hashrate drop should become apparent after the situation normalizes.
The uprising comes after China’s ban of Bitcoin mining, spurring most Bitcoin mining machines (ASICs) to uproot for happy horizons, particularly the United States and Kazakhstan. Kazakhstan absorbed much of the fleeing hashrate, such as a large allocation of ASICs from manufacturer and miner Canaan. The Cambridge Center for Alternative Finance (CAF) estimates the central Asian country’s hashrate to be around 20% of the total network.
After the migration, Kazakhstan started to put pressure on the industry. The Energy Minister considered issuing an order to restrict power to Bitcoin miners, suggesting they are too energy-intensive. Some miners had been shutting down for months citing the country's political risks.
As these events continue to unfold, it is starting to become clear that Kazakhstan may not be a good long-term home for Bitcoin miners. Of course, only time will tell, but Kazakhstan’s number two spot on the leaderboard may be in jeopardy.