Kazakhstan Energy Crisis Looks Set to Dampen Bitcoin Mining Operations

UTC by Tolu Ajiboye · 3 min read
Kazakhstan Energy Crisis Looks Set to Dampen Bitcoin Mining Operations
Photo: Depositphotos

Protests in Kazakhstan from rising gas and energy prices, and the resulting internet blackout, could inhibit Bitcoin mining in the Central Asian nation

The recent wave of protests over surging energy prices in Kazakhstan may adversely impact Bitcoin (BTC) mining in the country. Irate protesters recently stormed government buildings in Kazakhstan to express their distaste for the hike in gas prices. Furthermore, this development, which has now entered its fifth day, led Kazakhstan’s largest telecommunications provider to shut down access to the internet.

Bitcoin mining relocated from China and settled in Kazakhstan following the sweeping government crackdown on the industry in China. This led to a short, rapid burst of growth in Kazakhstan’s Bitcoin-mining profile. For instance, the Central Asian nation was second only to the US in energy earmarked for crypto mining last year, according to Cambridge University. The university put the figure at about 18% of the global total as of August.

However, the relative boom that Bitcoin miners enjoyed in Kazakhstan now seems likely to end. This is because electricity supply issues and internet outages stemming from the country’s energy price crisis is inhibiting Bitcoin mining activities. As a matter of fact, some BTC miners have already started packing up to exit Kazakhstan. According to reports, many of these miners now seem to view the US as their next likely stop for mining operations.

Bitcoin-Mining Activities Has Posed a Strain on Energy Supply in Kazakhstan for a Short While Now

Throughout the tail end of 2021, Kazakhstan grappled with sustaining the adequate flow of electricity after BTC mining operations increased. Furthermore, during the cold winter months, the country’s persistent energy shortages forced its national grid operator to a practical decision. KEGOC began to supply mining facilities with reduced energy power during peak usage hours. This was in a bid to maximize what was available to all.

However, the issue of ‘gray mining’ in Kazakhstan is also posing a serious challenge to the government of the Central Asian nation. Gray mining comes from the number of undocumented and unregistered miners currently operating in Kazakhstan, effectively using its available power. According to a report from Kazakh officials, this unwelcome development accounts for 1,200 megawatts in added electricity consumption.

Kazakhstan’s internet shutdown has also reportedly affected the hashrates of Antpool, Poolin, F2Pool and Binance Pool. According to Jaran Mellerud, a researcher at Arcane Research, Kazakh miners use these pools, but the lack of internet access changes this. Mellerud also said:

“I guess some geeks would say that in theory you could mine without internet, but in practice, all the machines in Kazakhstan should be turned off because of the internet shutdown.”

Kazakh Protests

Due to the magnitude of protests erupting in Kazakhstan, the country’s government has requested peacekeeping troops. Over the weekend in Kazakhstan’s largest city, protests turned ugly as riot police deployed extreme measures to quell protesters. Police used tear gas canisters and stun grenades on pockets of protesters across town. This out-of-control development further led Kazakh President Kassym-Jomart Tokayev to relieve his predecessor Nursultan Nazarbayev of his executive advisory role.

By late Wednesday, Moscow said it would send the requested peacekeeping forces to Kazakhstan.

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