On January 5, amid ongoing protests in Kazakhstan, there was a complete shutdown of the Internet, including for wired operators. According to NetBlocks, the shutdown continued on January 6, as confirmed by the local newspaper Vlast.
In Kazakhstan, since early morning, the Internet is again absent. https://t.co/ae0Ys4sl3Z
– Power (@Vlastkz) January 6, 2022
According to the GlobalCheck project, on Wednesday, in most of the country, the Internet did not work for more than five hours. Several wired and mobile providers continued to provide customers with network access. In Almaty, the wireless connection is still disabled for most operators.
According to BTC.com, the hashrate of bitcoin fell by 12% in several hours of no internet in Kazakhstan. At the time of writing, the aggregate computing power of the network is estimated at 179 EH / s, which is higher than on January 4.
Due to the shutdown of the Internet in Kazakhstan, the hashrate of Bitcoin’s entire network dropped by about 12%. Together with the minutes of the latest meeting of the Federal Reserve, the crypto market has also fallen. pic.twitter.com/ksDIGeiY8b
– BTC.com (@btccom_official) January 6, 2022
The chairman of the National Association of Blockchain and Data Center Industry of Kazakhstan, Alan Dordzhiev, in a conversation with Cryplogger, confirmed that “mining farms are disabled during the blocking of the Internet throughout the country.”
According to Dordzhiev, the Internet works only in the capital of Kazakhstan – Nur-Sultan. The rest of the territory has no access to the network. He also stressed that industry companies are waiting for the situation to clear up.
The worst hit pools were 1THash (-82%), OKEx Pool (-46.3%) and KuCoin Pool (-22.7%). The hash rates of Poolin and ViaBTC also decreased by 15.8% and 19.2%, respectively.
The situation was reflected in the exchange of cryptocurrencies. At the time of writing, on the Binance P2P platform, the price is for 1 BTC paired with Kazakhstani tenge (KZT) begins from 19 161 257 KZT (~ $ 43 990). On the spot site of the exchange, paired with the dollar, the first cryptocurrency is traded near $ 42,905. LocalBitcoins a similar picture is observed – sellers ask for 1 BTC from 19,766,363 KZT (~ $ 45,380).
Bitcoin rewards on peer-to-peer platforms often arise against a backdrop of acute political and economic instability, as has already been seen in Hong Kong and other countries. It remains unclear whether the exchange is taking place at higher prices, as the central bank of Kazakhstan is temporarily suspended the work of banks and other financial organizations.
The correlation between hashrate and bitcoin price remains a topic of discussion. Some believe that there is a causal relationship between the two indicators. For others, price movement is always driven by a combination of factors. In any case, there are not enough arguments to assert that intraday hash rate fluctuations are immediately reflected in quotes both in general and in a particular situation on the night of January 6.
In 2021, due to the ban on cryptocurrency mining in China, some miners moved their equipment to Kazakhstan. According to Financial Times, more than 87,000 devices were shipped to the country.
Companies opened their own facilities or hosted equipment on third-party hosting sites. For example, this is what the pools did Poolin and ViaBTC. The latter entered into a partnership agreement with Enegix back in 2020.
According to the Center for Alternative Finance of the University of Cambridge, in August 2021, the share of Kazakhstan in the hashrate of the bitcoin network reached 18.1%.
The increased interest of miners in operations in the country is also indicated by the initiatives of equipment manufacturers. In November, Canaan shipped a shipment of 2,000 AvalonMiner ASICs to the country. In December the company signed partnership agreements with several local businesses. At the end of 2021, about 10,300 Canaan devices were already operating in Kazakhstan.
In August, The9, listed on the Nasdaq, through its subsidiary NBTC Limited, entered into an agreement with Kazakhstan’s LGHSTR to create a joint venture. Earlier, she signed an agreement with KazDigital for the construction of a 100 MW data center.
In December 2021, some miners started leaving Kazakhstan due to electricity problems. BitFuFu and Xive started relocation then.
We have already written about how to bypass Internet blocking in the article about the shutdown in Belarus.