The state of Bitcoin mining in Kazakhstan

Kazakhstan has wreaked havoc on the bitcoin mining industry as an energy crisis sparked a series of protests and political instability last week. Russia has reportedly sent “peacekeeping forces” to the Central Asian country at the behest of President Kassym-Jomart Tokayev, a move that sparked a revolt across the region. Besides rising gas prices, Kazakhstan’s current intermittent energy and internet access have caused bitcoin mining operations to be unstable there, hurting the hash rate of the wider Bitcoin network. a estimated at 18% of which was hosted in the Central Asian country in July 2021.

Didar Bekbau, co-founder of Kazakhstan-based bitcoin mining company Xive, explained in a Twitter feed that despite a broader negative sentiment regarding the future of bitcoin mining in the country, the current situation should be temporary as he expects Kazakhstan to be a long-term “mining port”.

“There is enormous potential to build a new generation of electricity [in Kazakhstan]”Bekbau said, adding that the outlook is good for both traditional and renewable energy sources. However, he stressed that political stability and foreign capital are essential for moving the industry forward in the Central Asian country. .

Concerns have also been raised about the safety of bitcoin mining farms as riots clash with police forces in violent clashes, but Bekbau said these conflicts have mostly taken place in the south of the country as mining operations continue. is concentrated in the central and northern regions.

“It’s a pretty safe situation for mining sites and facilities,” Bekbau said.

According to the miner, the main problem for the mining industry in Kazakhstan remains internet access. After the protests, Tokayev declared a nationwide state of emergency, cutting off phone and internet access across the country, The Washington Post reported. According to the report, Tokayev initially responded favorably to popular discontent, agreeing to lower fuel prices, but as the protests escalated his position quickly changed, attributing the unrest to outside “conspirators” and by calling on the Russian-led Collective Security Treaty Organization for troops to help with what he called a “counterterrorism operation.”

Around 6,000 people have been arrested and 164 killed as Russian troops act on Tokayev’s order on Friday for security forces to “shoot to kill without warning” as the president says foreigners are behind the turmoil, the Financial Time reported Monday.

“So far, 125 criminal cases have been opened and 5,800 people, including a significant number of foreigners, have been brought to justice,” Tokayev’s office said, according to the report.

Marathon Digital Holdings CEO Fred Thiel says Bitcoin Magazine that some bitcoin mining operations with which he has been in contact have engaged private security forces to contain possible threats and protect staff and facilities from possible negative impacts resulting from the protests.

Thiel adds that the government is worried about the closure of bitcoin mines and the confiscation of equipment, a kind of environment that is not very welcoming to the industry. Despite the high cost associated with overseas displacement operations, according to Thiel, the biggest obstacle is the general instability and lack of security, which make it impossible to relocate equipment and personnel safely as military forces continue to relocate. foreigners and locals patrol the country and violent clashes with the demonstrators.

Kazakhstan is still filled with uncertainties and major bitcoin mining operations are offline, but the impact is limited and is expected to be short-lived, Bekbau said. Restoring internet access is expected to bring most minors back online, despite the usual winter power rationing measures, as demand peaks between 6 p.m. and 11 p.m. most of the time due to the increase. of energy consumption by households, he said.

Kazakhstan’s strategic geographical location between Russia and China and the country’s enormous uranium reserves, which represent around 40% of the world’s supply, make it vital for international diplomacy, hence a need for political stability and military in this Central Asian country. According to FT report, US Secretary of State Anthony Blinken condemned Tokayev’s “shoot to kill” order as he urges country to tolerate peaceful protests while denigrating the president’s call for Russian help , saying: “These should be things the government of Kazakhstan can handle on its own.”

Political instability is causing uncertainty in the bitcoin mining industry as companies have their hands tied in the midst of violent conflict, but due to a different geographic location than most riots, miners could have a prosperous future once Internet access is restored. The timeline is uncertain, however, because according to the FT report, Deputy Defense Minister Sultan Gamaletdinov said the counterterrorism operation would continue “until terrorists are completely eliminated and constitutional order is restored in the Republic of Kazakhstan.”

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