World's second-largest Bitcoin mining hub goes offline amidst Kazakhstan's raging protests

The ongoing protests in Kazakhstan dealt a major hit to the Bitcoin network on Thursday, as the country saw a nationwide internet shutdown. Unavailability of the internet caused the country's large Bitcoin mining network to remain inactive throughout the day, causing a steep drop in the global computing power of the Bitcoin network.

Kazakhstan has been dealing with mass protests that began on New Year's Day following a sharp price hike in fuel. In the following week, the protests turned violent as hundreds of protestors stormed government buildings in the country. The Kazakh government has now declared a state of emergency and asked for troops from Russia to quell the unrest.

The situation has rendered the Bitcoin mining network in the country, which is the second-largest in the world after the US, to be inoperable. With the nationwide internet blackout, Kazakhstan-based miners are no longer able to access the Bitcoin network. This further led to a steep drop in the cryptocurrency's value on Thursday.

As pointed out by Reuters in a report, Kazakhstan accounts for 18 per cent of the global hashrate for Bitcoin. Hashrate is a measure of the computational power needed per second for mining a cryptocurrency. With the internet shutdown in Kazakhstan on Thursday, the global hashrate went down by around 14 per cent.

In theory, a drop in the hashrate would make it easier for the rest of the miners on the network to mint the cryptocurrency. This is because the greater the number of miners are on a network, the more computing power is required for mining. The absence of Kazakhstan-based miners from the network for the day would have made it easier for those based in the US and elsewhere to mine Bitcoin.

However, the drop in hashrate had an adverse effect on the price of Bitcoin, which saw a downward plunge on the crypto market, bringing down several other cryptocurrencies along with it.

Bitcoin mining in Kazakhstan

Bitcoin mining requires huge computational setups that in turn need a substantial amount of energy to run throughout the day. Due to this, such Bitcoin mining rigs are now being blamed for large energy consumption and resulting carbon emissions in various parts of the world. With the series of crackdowns by China on its Bitcoin mining rigs in these grounds, many miners shifted base to Kazakhstan. Now, most of these mining rigs are powered by energy generated from the country's coal plants.

The mass movement also made Kazakhstan the world's second-largest centre for bitcoin mining last year, ranking only after the United States. As Reuters reports, the Kazakh government may now be planning to crack down on the unregistered miners in the country, who might be consuming twice as much power as the ones that are registered. In totality, miners in Kazakhstan may now be consuming about 8 per cent of Kazakhstan's total energy generation capacity.