The eyes and ears of the world have been on Kazakhstan for a while. The Kazakhs, who had a very quiet life for years, were almost infuriated after the government’s decision to raise money. Complaining about the price hikes and the cost of living, the people turned the streets into a war zone. The events calmed down for a few days, but the events in Kazakhstan seriously shook the cryptocurrency market. You ask why? Let’s explain.
Kazakhstan was a very advantageous country for cryptocurrency mining. The good thing is, the government was well aware of this. Empty and old warehouses in the country were cut out for the establishment of mining farms. Moreover, the cold climate also negates the extra costs required to cool the devices, which in general allowed millions of dollars in savings. Moreover, Kazakhstan was already a country where energy was cheap. All this has turned Kazakhstan into a mining paradise.
China’s ban decision has made Kazakhstan a favorite of millions
The Chinese government has always been tough on cryptocurrencies. However, China remained the center of cryptocurrency mining for a long time. In fact, more than 60 percent of miners worldwide were in China. However, a statement made last year thwarted the plans of miners in China. The Chinese government has announced that mining is prohibited. This prohibition led to the flock of miners to migrate to Kazakhstan. Because Kazakhstan was very close to China. Shipping tens of thousands of devices has never been difficult for miners. The events had made Kazakhstan a favorite of miners. Until October 2021. . .
Thinking that everything was going well, Kazakhstan encountered an unexpected situation despite cheap energy. Miners flocked to the country, placing an unprecedented strain on Kazakhstan’s energy grids. The government wanted to prevent 8 percent of all electricity in the country from being used by miners. This time, the miners faced an unexpected restriction. The government announced that it will immediately cut off the energy of miners that cause excessive consumption and risk of blackout. Once capacities are back to normal, miners will be able to regain electricity.
Interruptions started between 18:00-23:00
Miners in Kazakhstan were still in good standing as of October 2021. Didar Bekbauov, who established a mining farm in the region, said that there were interruptions between 18:00 and 23:00 on some days, and stated that they thought this would continue until March 2022 at most. This would cost tens of thousands of dollars and was risky. Because the sudden stop of the working systems could cause malfunctions due to cold weather. However, all this did not intimidate the miners, and the companies continued to work. Now the situation is worse than it has ever been. . .
January 2022: Unprecedented uncertainty begins for miners
Kazakhstan has become a nightmare for Bitcoin miners due to the turmoil that started recently. The frequency of incidents such as looting has put mining farms on alert. In fact, according to the news from the region, some mining farms have taken various measures to ensure facility safety. Fortunately, no loot has been reported so far. So what’s the problem? Mining devices, the number of which is not known exactly and cannot be operated for days, the ongoing unrest and Russian soldiers in the country. . .
The authorities that brought together the miners in Kazakhstan do not know what to do. The only statement made by the authorities is that their only concern for now is to protect the facilities. In the statements made by the President of the Kazakhstan National Association of Blockchain and Data Centers Industry Alan Dorjiyev, it is stated that all farms are safe for now, but no one knows what will happen tomorrow. If the protests shift to mining farms in the north of the country, worse days may await the cryptocurrency world. Unfortunately, we have no choice but to wait for now. . .
The balance sheet of events in Kazakhstan to the cryptocurrency community:
The turmoil in the country, which has become a favorite of the mining world, has reduced the amount of computing power, that is, the Bitcoin hash rate, by 12 percent, for the Bitcoin network to work continuously. In addition, the atmosphere of uncertainty caused investors to flee and seek refuge in safe havens. Analysts think that the events may have cost the mining industry in Kazakhstan $7.2 million. As the events drag on, the hash rate continues to drop, and the investor flees, the cryptocurrency industry will continue to suffer more. This will affect the price of all cryptocurrencies, especially Bitcoin.
Why don’t they go?
You might be wondering why the miners didn’t leave Kazakhstan when things got so out of hand. Such a thing, unfortunately, is hardly possible. Because there is no other country around where energy is as cheap as Kazakhstan. Moreover, there are sanctions in some countries. As such, the only solution is the USA. But going from Kazakhstan to the USA is fraught with numerous risks. What are these risks?
Mining companies think that the devices they use are very expensive and that these devices can be damaged during transportation. It also takes a long time, like 2 weeks, to move the mining farms in the country from Kazakhstan to the USA. Moreover, these are not the only problems. Setting up a Bitcoin farm in the USA is not an easy task, and it takes months of preparation before a mining farm can be established. In other words, there is no other option for the miners other than to stay in Kazakhstan and hope that things will calm down. . .
This content cannot be considered as investment advice.
53808
