Kazakhstan crackdown drains Bitcoin network power

The deadly uprising in Kazakhstan that led to the shutdown of the internet has hit the global computing power of the bitcoin network.

Kazakhstan became last year the world’s second-largest centre for bitcoin mining after the United States.

Russia sent paratroopers into Kazakhstan on Thursday to help put down the countrywide uprising after violence spread across the tightly controlled former Soviet state.

Police said they had killed dozens of rioters in the main city Almaty, while state television said 13 members of the security forces had died.

The internet was on Wednesday shut down across the country in what monitoring site Netblocks called “a nation-scale internet blackout”.

The move would have likely prevented Kazakhstan-based miners from accessing the bitcoin network.

Bitcoin fell below $43,000 on Thursday, testing multi-month lows after investor appetite for riskier assets fell as the U.S. Federal Reserve leant toward more aggressive policy action.

The more miners on the network, the greater the amount of computer power is needed to mine new bitcoin. The hashrate falls if miners drop off the network, in theory making it easier for the remaining miners to produce new coin.

Kazakhstan’s crypto mining farms are mostly powered by ageing coal plants which themselves – along with coal mines and whole towns built around them – are a headache for authorities as they seek to decarbonise the economy.

The Kazakh government said last year it planned to crack down first on unregistered “grey” miners who it estimates might be consuming twice as much power as the “white” or officially registered ones.

The country’s uprising began with protests in the west of the country against a New Year’s Day fuel price hike.