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Bitcoin network power slumps as Kazakhstan crackdown hits crypto miners

Bitcoin network power slumps as Kazakhstan crackdown hits crypto miners
Written by publishing team

by Tom Wilson

LONDON (Reuters) – The global computing power of the Bitcoin network has fallen sharply as the internet shut down in Kazakhstan this week during the deadly uprising that hit the country’s fast-growing crypto-mining industry.

Kazakhstan last year became the world’s second largest center for bitcoin mining after the United States, according to the Cambridge Center for Alternative Finance, after the main hub in China imposed restrictions on crypto-mining activity.

Russia sent paratroopers to Kazakhstan on Thursday to help quell a nationwide uprising after violence spread across the tightly controlled ex-Soviet country. Police said they killed dozens of rioters in the main city of Almaty, while state television said 13 members of the security forces were killed.

On Wednesday, the internet was shut down across the country in what monitoring website Netblocks called a “state-wide internet blackout”.

The move is likely to prevent miners in Kazakhstan from accessing the Bitcoin network.

Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers, usually in data centers in different parts of the world, that compete to solve complex mathematical puzzles in an energy-intensive process.

In August of last year, the most recent data available, Kazakhstan accounted for 18% of the global “hash rate” – the cryptographic language for the amount of computing power used by computers connected to the bitcoin network.

In April, before China’s latest crackdown on bitcoin mining, the figure was just 8%.

The hashrate of major mining pools — groups of miners in different locations working as a team to produce bitcoin — including AntPool and F2Pool Thursday at 1215 GMT, was down about 14% from their level late Tuesday, according to For data from a BTC miner. com. None of the rosaries immediately responded to a Reuters request for comment.

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However, the low hash rate does not necessarily support the price of bitcoin.

Bitcoin plunged below $43,000 on Thursday, testing multi-month lows after investors’ appetite for riskier assets waned as the US Federal Reserve moved towards tougher policy measures.

The more miners are on the network, the more computer power is required to mine new bitcoins. The hash rate drops if miners withdraw from the network, which in theory makes it easier for the remaining miners to produce new coins.

Crypto mining farms in Kazakhstan are mostly run by old coal plants which – along with coal mines and entire cities built around them – are a concern for the authorities as they seek to decarbonize the economy.

The Kazakh government said last year it planned to crack down first on unregistered “gray” miners who it estimated could consume twice as much energy as “white” or officially registered miners.

The Energy Ministry said last year that “gray” mining could consume up to 1.2 gigawatts of power, which with 600 megawatts of “white” miners amount to about 8% of Kazakhstan’s total generation capacity.

The uprising in the country began with protests in the west of the country against rising fuel prices on New Year’s.

(Reporting by Tom Wilson; Editing by Emilia Sithole Mataris)

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