The bitcoin rate is rapidly falling due to protests in Kazakhstan. Over the course of a day, it sank by more than 7%. The republic broke into second place in terms of token production, but against the background of what is happening in the country, mobile and wired Internet are disabled, and without access to the Network, mining is impossible. The restrictions also hit the world bitcoin hash rate – its drop in just a few hours reached 12%, and in some pools it is more than 80%.
Protests are killing Bitcoin
Bitcoin, considered the main cryptocurrency in the world, is experiencing a rapid decline in the exchange rate against the backdrop of events in Kazakhstan. As of 11:00 on January 6, 2022 Moscow time, one token cost about $ 43.1 thousand (3.2 million rubles at the Central Bank exchange rate as of January 6, 2022). This price was calculated by the CoinDesk profile resource based on the XBX index – the bitcoin spot rate. The index value is calculated based on the observed trading activity on the largest crypto exchanges.
Mass protests are taking place in Kazakhstan due to a twofold increase in prices for liquefied gas since January 1, 2022. In a number of large cities of the republic, they have resulted in clashes with the police, riots, robberies and looting.
The consequence of all this was the disconnection of the Internet throughout the republic. CNews wrote that at first it affected the mobile Internet and the work of instant messengers, but then the wired Internet began to fail.
Miners from all over the world suffer because of Kazakhstan
The lack of access to the Network throughout Kazakhstan influenced the collapse of bitcoin. After the prohibition of cryptocurrencies in the PRC, Chinese miners staged a massive resettlement to other countries, including Kazakhstan. This brought the republic to the second place in the world in the extraction of cryptocurrencies (statistics of the University of Cambridge for August 2021), although a year earlier it was on the fourth line. The share of Kazakhstan in the global volume of energy consumption for mining increased to 18%.
In just a day, the bitcoin rate sank by more than 7%, reports CoinDesk. In general, at present it is very far from its historical maximum – $ 68.99 thousand (5.125 million rubles).
The situation could get worse
Events in Kazakhstan affect not only the exchange rate, but also the bitcoin hash rate. A few hours before the complete shutdown of the Internet in the republic, experts of the analytical service BiMEX Research announced a forecast for a sharp decrease in the global hash rate of the main cryptocurrency, in which Kazakhstan accounts for about 18.1%.
How soon Bitcoin will be able to recover from such a blow, and whether, in principle, it will be able to, is unknown.
Not the most optimistic forecasts of analysts came true almost instantly. The shutdown of the Internet led to a drop in the bitcoin hash rate by about 12%, and this is only an average value. On many popular pools, the drawdown exceeded 40%, and the 1THash pool recorded an 82% fall.
Why Kazakhstan, not Russia
The massive migration of Chinese miners to Kazakhstan, rather than Russia, is driven by numerous legal obstacles that Russian miners face. At the time of publication of the material, any operations with cryptocurrencies were under the threat of total blocking.
The Central Bank is directly opposed to crypto-money. The authorities also do not approve of the desire of Russians to make money on bitcoins and other tokens – in the State Duma there are even proposals on criminal liability for them, and the Prosecutor General’s Office is preparing a law on the arrest and confiscation of crypto money from Russian citizens.
At the time of publication of the material, the fate of cryptocurrencies in Russia has not been determined. They can be either legalized or completely banned. The authorities will make the final decision by the end of the second quarter of 2022.
Such uncertainty does not contribute to the growth of the popularity of mining in Russia. Nevertheless, as CNews reported, in August 2021 it ranked third in Bitcoin mining with a global share of 11.23%. Only Kazakhstan (18.1%) and the USA (35.4%) were ahead of it.
More recent statistics on bitcoin mining are not yet available. It is possible that the events in Kazakhstan, as well as the massive resettlement of Chinese miners to the United States and Canada, will change the balance of power.