There is more to the serious turmoil in Kazakhstan than the sheer dissatisfaction of a population with the rise in fuel prices. Rather, the citizens are rehearsing the uprising against a regime that has been steering the fate of the Central Asian country since 1990. Ruler Nursultan Nazarbayev resigned in 2019 with the renaming of the capital (Nur-Sultan) in honor of his name. But that was not a farewell to politics. Rather, the now 81-year-old has been pulling the strings in the background.
Conditions similar to civil war have prevailed in Kazakhstan since the protests began. The unrest has now claimed over 40 lives – with losses on both sides. The city of Almaty in the southeast of the country is like a war zone. The incumbent President Kassym-Jomart Tokayev requested military support from Russia and gave the police and army the order to shoot in a televised address.
Kazakhstan’s hopes rested on Bitcoin
Kazakhstan is rich in natural resources. Oil, gas and coal make the former Soviet state an important trading partner – also for Germany. However, a large part of the population benefited little from the economic developments. The gap between rich and poor is high, and should not least be a factor in the protests that are now escalating.
In the middle of last year, natural resources were joined by another raw material, this time of a digital nature: Bitcoin. Hopes were high when Kazakhstan enjoyed an enormous influx of foreign miners after the mining ban in China. At that time, numerous miners moved from the Middle Kingdom to the republic on the Caspian Sea, low energy prices and short distances beckon. Kazakhstan rose to become the second most important mining hotspot within a very short time. 18 percent makes the Central Asian country meanwhile at the global hashrate. The Kazakh government hoped for additional tax revenue in the billions, and passed a new law that came into force on January 1 of this year.
Internet failures and energy bottlenecks make miners wonder
With the unrest, however, this hope has been diminished for the time being. Nationwide internet failures silenced the whirring of Bitcoin mining systems in many places. Top mining pools lost up to 10 percent of their hashrate. Didar Bekbau describes the status quo on Twitter:
The co-founder of the mining company XIV hopes for a quick start-up in the course of the coming week.
However, the ongoing failure of the Internet is only the latest drop in a barrel that was already threatening to overflow. Because Kazakhstan has been struggling with massive energy bottlenecks since the influx of digital miners. The government reacted by reducing supplies to miners. As a consequence, the mining host canceled BitFuFu to give up the Kazakh plant to build a new one in the United States.
Are the mining companies now moving to the United States?
Xive also withdrew 2,500 devices from the country. Bekbau called also the USA as a destination:
I’m looking for opportunities to open a mining farm in the United States. This is my American dream – more and more mining decentralization.
Didar Bekbau, co-founder of Xive
Of course, it remains to be seen how many miners will emulate Xive and BitFuFu and migrate from Kazakhstan to the supposed North American mining Mecca. However, Peter Marggraff already sees an emigration trend. In an interview with BTC-ECHO, the managing director of Crypto Supply:
We had contact with various customers from Kazakhstan at Blockchance. Even then, they complained that they could only operate 50 percent of their hardware and that more and more devices were being switched off due to the power shortages. So there is already a trend towards emigration.
Peter Marggraff against BTC-ECHO
The main goals under discussion are Russia and the USA. Should such a scenario prove to be true, however, the question arises, especially with regard to the USA, to what extent an emigration would be beneficial to the desire for more decentralization in Bitcoin mining, because even with an emigration to the USA one would “of course be heavily dependent again ”As Marggraff says.
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Bitcoin mining in Kazakhstan about to end?