On Wednesday, Kazakhstan, the world’s second largest country for bitcoin (BTC) mining hash rate, experienced unprecedented political turmoil due to a sharp rise in fuel prices. As a result, the country’s presiding cabinet resigned, but not before the state-run Kazakhtelecom restricted internet access in the country, causing network activity to drop from its daily highs to 2%.
The move was a severe blow to bitcoin mining activity in the country. According to data from YCharts.com, the global hash rate of the Bitcoin network fell 13.4% from around 205,000 petahashes per second (PH / s) to 177,330 PH / s in the hours following the internet crash. The country accounts for 18% of the hash power of the Bitcoin network.
A few days earlier, the Kazakh government lifted liquefied petroleum gas price caps on car fuel to meet market conditions and doubled the price overnight, sparking violent protests. At the time of going to press, the Internet is not yet accessible in Kazakhstan. If it lasts longer, the consequences could be catastrophic because, aside from internet services, the Kazakh Data Center and Blockchain Industry Association expects the country to generate $ 1.5 billion in legal cryptocurrency mining (and other) activities over the next five years.
Low energy prices in the country have attracted national and foreign companies to set up in Bitcoin mining. According to Global Petrol Prices, electricity in Kazakhstan costs an average of just $ 0.055 per kWh for businesses, a fraction of the $ 0.12 per kWh US companies pay.