The power of the Bitcoin network is waning as Kazakhstan’s crackdown on Reuters hits crypto miners

By Tom Wilson

LONDON (Reuters) – The global computing power of the Bitcoin network has dropped sharply this week as Kazakhstan’s internet closures in a deadly uprising over the country’s growing cryptocurrency mining industry.

Kazakhstan became the second largest bitcoin mining center in the world after the United States last year, according to the Cambridge Center for Alternative Finance, one of the most important sites in China for reducing crypto mining activity.

Russia sent paratroopers to Kazakhstan on Thursday to help halt the uprising across the country after violence spread across the former Soviet-controlled state. Police said dozens of incidents were killed in the main city of Almaty, while state television killed 13 members of the security forces.

The Internet was shut down on Wednesday by Netblocks, a monitoring site called “a nationwide Internet blackout.”

The move would likely prevent Kazakhstan miners from accessing the bitcoin network.

and other cryptocurrencies are created or “mined” by high-powered computers, usually in data centers around the world, and compete to solve complex mathematical puzzles in a process that consumes a lot of energy.

In August last year, according to the latest available data, Kazakhstan accounted for 18% of the global “hashrate” – the cryptocurrency 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 crypto mining pools – groups of miners from different places that come together to produce bitcoin – including AntPool and F2Pool on Thursday at 1215 GMT fell about 14% from its level on Tuesday night, according to data from mining company BTC. com. Pools did not immediately respond to Reuters’ request for comment.

CRYPTO MINING REPRESSION

However, the fall in hashrate does not necessarily support the price of bitcoin.

Bitcoin fell below $ 43,000 on Thursday after its appetite for the most dangerous assets of investors fell as the U.S. Federal Reserve turned to more aggressive policies.

The more miners on the network, the more power is needed to make the new bitcoin. The hash rate goes down if the miners leave the network, which in theory makes it easier for the rest of the miners to produce new coins.

Kazakhstan’s crypto-mining farms are mostly fed by obsolete coal-fired power plants, and they – along with the coal mines and all the villages built around them – are a headache for the authorities, who want to decarbonise the economy.

The Kazakh government has said it intends to crack down on unregistered “gray” miners last year, believing that they can consume twice as much energy as “whites” or officially registered miners.

His energy ministry said last year “gray” mining could consume 1.2 GWt of power, which, along with 600 MWt of “white” mining, accounts for about 8% of Kazakhstan’s total generation capacity.

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