Inflation Caused Riots Made Government To Cut Internet Throughout Kazakhstan Seriously Effecting Bitcoin Mining - The Crypto Basic
Inflation causes demonstrations in Kazakhstan, the government shuts down the internet, and bitcoin falls.
Kazakhstan, a country that borders Russia and China, is witnessing violent demonstrations this week; there are reports that dozens of protesters and police lost their lives. The reason for these riots is rising inflation, mainly the increase in LPG gas prices, the primary fuel in the country.
As a way of trying to contain the rallies that have lasted for four days, the government stopped internet services in the country. As a side effect, Bitcoin is estimated to have lost 18% of its mining computational power, or hash rate. According to Fortune, Kazakhstan was hosting 18% of global bitcoin mining as of August.
The situation in Kazakhstan was initiated by the rise in the price of LPG gas, the increase in LPG gas will cause an upsurge in transportation costs that will be reflected in all kinds of consumer goods.
As a result, the protests quickly grew more prominent, showing the people’s discontent with a government that led 29 years, between 1990 and 2019, by Nursultan Nazarbaev. Despite his departure, it is clear that he still has a lot of influence over the current President of Kazakhstan, Kassym-Jomart Tokayev.
Kazakhstan is experiencing some violent demonstrations, a kind of civil war. As a result, dozens of dead and thousands of people got injured. As a way of trying to reduce the spread of such demonstrations, the Kazakh government turned off the internet in the country. Consequently, local miners were affected as the BTC mining activity depends on the internet.
Rising Electricity Concerns
Although it is impossible to estimate a precise number of the drop in the Bitcoin hash rate, it is worth noting that after the ban on mining in China, Kazakhstan was one of the countries that harbored most miners, possibly due to its geographic aspects. Besides Kazakhstan, the USA and Russia were other countries that saw the arrival of miners from China.
Kazakhstan bitcoin mining dramatically surged into third place on the global market as the country’s share reached 18 percent of Global BTC mining, reported by Cambridge Centre for Alternative Finance, which caused some grave electricity problems.
In 2021, the electricity use in Kazakhstan reached 82.99 billion kWh. The Kazakhstan Energy Ministry attributed this high consumption to Bitcoin mining data centers in the country. According to the ministry’s calculations, it is necessary to build additional energy sources of at least 1000 MW to provide mining farms with sufficient electricity. In early October, the Ministry of Energy presented a draft order limiting the power consumption of one mining farm to 1 MW. and the total capacity of farms in the country to 100 MW.
To buy Russian electricity. Recently, the Director of the Electricity Development Department of Kazakhstan, Aidos Daribayev, said that the state-owned energy firm Samruk-Energo began negotiations with Russian Energy giant Inter RAO to establish a joint partnership. Aidos Daribayev further noted that the country’s energy consumption increased by 8% during the first ten months of the year 2021, While in previous years, the growth rate was between 1 to 2% per year.
Impact On Bitcoin Price
Along with Kazakhstan mining issues, The Bitcoin market sell-off was triggered after the U.S. Federal Reserve indicated that an interest rate hike could occur in March rather than the usual time frame.
Bitcoin has fallen below $42K while Ethereum is trading below $3300. The fresh rally of downfall has caused some severe trading positions liquidations; crypto liquidation reached $102 million in just half an hour, $40 million in BTC, and $42 million in ETH. If the King crypto cannot hold the physiological support of $40K, we might see more intense bleeding.
The fall in bitcoin prices has led to a sharp decline in altcoin markets. More than 200,000 traders got liquidated in the last 24 hours. More than 87% of the $800 million in liquidation in the past 24 hours was in long positions. Cryptocurrency exchange OKEx liquidated $241 million, the highest among major exchanges, while traders on Binance suffered losses of $236 million.
Back to the list