Bitcoin's global hashrate tumbles after Kazakhstan shuts off country's internet

[midian182]

Why it matters: A lot of people today only know Kazakhstan as the home of fictional character Borat, but it’s also one of the biggest Bitcoin-mining nations. The country’s importance in the world of crypto was illustrated this week when the overall BTC hashrate fell 13.4% after Kazakhstan’s internet was shut down amid widespread protests and violent clashes between protestors and authorities.

Research by the Cambridge Centre for Alternative Finance last year showed that Kazakhstan had become the second-largest center for Bitcoin mining after China clamped down hard on the industry. The country was responsible for 18% of all Bitcoin mining as of August—that figure stood at 8% before China started hammering down on crypto.

The scale of Kazakhstan Bitcoin mining operations was made apparent this week when, after protests over sharply rising fuel prices led to widespread unrest, "a nation-scale internet blackout" was put in place to disrupt protestors’ communications.

“I guess some geeks would say that in theory, you could mine without internet, but in practice, all the machines in Kazakhstan should be turned off because of the internet shutdown,” Jaran Mellerud, a researcher at Arcane Research, told CoinDesk.

With so many miners cut off from the Bitcoin network, the overall BTC hashrate fell from around 205,000 petahash per second to 177,330 petahash per second.

Btc.com estimates that Antpool, Poolin, F2Pool, and Binance Pool saw significant reductions in their hashrates around the same time as Kazakhstan's internet was shut down. According to Mellerud, the pools are widely used by Kazakh miners.

Bitcoin’s price has also plunged since the Kazakhstan blackout, dropping from around $46,000 to $41,000.

It’s estimated that over 87,849 power-intensive mining rigs moved from China to Kazakhstan following the former’s crackdown, attracted by the former Soviet state’s low electricity prices. Reports state that demand for electricity in Kazakhstan increased around eight percent last year, a surge that caused power shortages, blackouts in six regions of the country since October, and shutdowns at three power plants.

Electrical grid operator KEGOC announced in 2021 that it would be rationing electricity to 50 registered crypto miners. They will also be the first disconnected in the event of grid failures.

Kazakh officials said much of the increased power usage is the fault of "gray miners," unregistered crypto miners that operate from home or from factories. It’s estimated that they are behind the consumption of 1200 megawatts (MW) of power from the country’s power grid. Combined with "white" miners' 600 MW of power usage, mining accounts for 8% of Kazakhstan’s total energy consumption. This year will see registered miners charged a compensation fee of 1 tenge (about $0.0023) to help with the situation and identify illegal miners.

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https://www.techspot.com/news/92890-bitcoin-global-hashrate-tumbles-after-kazakhstan-shuts-off.html

 

[R00sT3R]

Well done, miners. Your parasitic scum ways have led to deaths on the streets...not that you'll care, of course.

All that matters to you, is chasing the $$$

 

[Kosmoz]

Well done, miners. Your parasitic scum ways have led to deaths on the streets...not that you'll care, of course.

All that matters to you, is chasing the $$$

I says rising fuel prices... what's that have to do with mining crypto?

after protests over sharply rising fuel prices led to widespread unrest, "a nation-scale internet blackout" was put in place to disrupt protestors’ communications.

 

[Lounds]

I says rising fuel prices... what's that have to do with mining crypto?

The waste of electricity usage to their grid. Crypto is a massive waste of electricity.

 

[Dimitriid]

The only problem is that the crash was not bigger as it should have lost much, much more value: it shows that crypto bros were just wrong when they minimized China closing down the doors for crypto: while you physically *can* move even large mining operations to somewhere else profitable if you can indirectly cause so much strain on a power grid to destabilize an entire country and basically send it into generalized protests as people were literally freezing to death due to rolling blackouts on a power grid that couldn't cope with the sudden influx of crypto mining, this just means that it will continue to happen no matter where miners move.

It's a fundamental design flaw of bitcoin: the arms race to increase hash rates is just not sustainable since the incentive is this exact behavior we've seen after they were run out of China: find the place with the cheapest electricity, not considering it's cheap *because* there's not enough generation and underlying infrastructure, and just overwhelm grids everywhere because everyone wants the most hash rate for the least power bill while the power consumption grows and grows without end.

It means this cycle will never end: I don't know how many more states or even countries need to be brought down past the point of complete social collapse before major financial institutions rescind their backing and this nonsense finally stop and dies.

 

[ScottSoapbox]

The waste of electricity usage to their grid. Crypto is a massive waste of electricity.

It's a way to make money in a poor country. You know, like all of the other high energy, high pollution, factories for everything that get put such places.

Should Kazakhstan's right eat be trumped by your feelings about what is "right" the environment?

 

[ScottSoapbox]

Kazakhstan government runs the country so poorly there are widespread protests.

Kazakhstan government's solution to protests is disruption of the internet nationwide.

Entitled outsider: see crypto is bad!

 

[Achaios]

Borat has your GPUs and he's using them to mine.

Would be interesting to see Borat as a Mining Farm owner, lol.

P.S.: The much-hated ETH has taken a tumble too. I hope that Miners will lose money out of this affair.

 

[QuantumPhysics]

Every Bubble eventually finds a pin!

 

[QuantumPhysics]

More than 80% of Bitcoin HODLERS never sold.

I'm wondering if the early adopters were mostly put into substandard platforms designed to lose their account access and create permanent HODLERS so that the price of Bitcoin never goes to absolute Zero?

Anyone who lost their password, forgot they had BTC, never knew they had BTC or was gifted BTC and forgot is a permanent HODLER.

 

[m4a4]

More than 80% of Bitcoin HODLERS never sold.

I'm wondering if the early adopters were mostly put into substandard platforms designed to lose their account access and create permanent HODLERS so that the price of Bitcoin never goes to absolute Zero?

Anyone who lost their password, forgot they had BTC, never knew they had BTC or was gifted BTC and forgot is a permanent HODLER.

The heck is a hodler?

 

[Kosmoz]

It means this cycle will never end: I don't know how many more states or even countries need to be brought down past the point of complete social collapse before major financial institutions rescind their backing and this nonsense finally stop and dies.

It will not end until the next global economic crash, which will come sooner or later and will be the biggest one yet or when WW3 starts, which will bring the same world wide economic crash, besides all the other horrible things that wars bring.

Only then all currencies (FIA and crypto) will crahs and out of the ashes will emerge "their" saving plan with the one world currency to rule them all, one world government and all that jazz.

P.S.: The much-hated ETH has taken a tumble too. I hope that Miners will lose money out of this affair.

Miners are not losing money with this dip at all, they just make less profit, but it's still a profit, so you hope for nothing.

The only ones that lose in these dips are those that buy high and sell low, inexperienced traders, not miners.

P.S. @m4a4 HOLDERS are those that don't sell crypto, but hold it for very long periods of time (years), they don't panic sell, they are part of those that control the crypto market basically.

 

[DaveBG]

Say what you want I am buying the dip.

 

[captaincranky]

And here I thought that Kazakhstan was just a place for the Russians to launch rockets. But then again, since it doesn't have Afghanistan's opium crop, what else would it be good for?

 

[wiyosaya]

The only problem is that the crash was not bigger as it should have lost much, much more value:

The possibility of the "Fed" in the US raising interest rates took over where this fell short. https://www.ibtimes.com/crypto-jan-7-bitcoin-falls-below-42k-mark-triggers-market-crash-3370998

 

[Squid Surprise]

Kazakhstan is NOT a poor country... it is run by a corrupt government making its citizens poor, however.

They have some of the richest natural reserves of fossil fuels in the world... There is no good reason for there to be any blackouts, rolling or otherwise, in this country.

The government may want to blame crypto... but they should be looking at themselves a little more carefully perhaps?

 

[captaincranky]

Kazakhstan is NOT a poor country... it is run by a corrupt government making its citizens poor, however.

Aren't they all? Maybe Canada should take an army over there, spend a few trillion dollars, and a couple of decades, trying to straighten it out.

Refresh my memory will ya, were you for, or against, the US war in Afghanistan?

 

[RudyBob]

Kazakhstan is NOT a poor country... it is run by a corrupt government making its citizens poor, however.

They have some of the richest natural reserves of fossil fuels in the world... There is no good reason for there to be any blackouts, rolling or otherwise, in this country.

The government may want to blame crypto... but they should be looking at themselves a little more carefully perhaps?

Glad to see some are paying attention

 

[punctualturn]

The waste of electricity usage to their grid. Crypto is a massive waste of electricity.

Yet spending countless hours gaming (meanwhile using more power than mining) is not a waste?

Example, my gaming pc burns over 600W + whatever my 65” oled tv uses when gaming, but 200W and no tv, when mining,

But I get it, only your needs are important and to hell with the rest.

 

[wiyosaya]

Yet spending countless hours gaming (meanwhile using more power than mining) is not a waste?

Example, my gaming pc burns over 600W + whatever my 65” oled tv uses when gaming, but 200W and no tv, when mining,

But I get it, only your needs are important and to hell with the rest.

Is that really relevant?

Many miners out there probably run 24/7 whereas most gamers probably never do that unless they are professionals and have no need to sleep. The net energy consumption of running 24/7, in KWh consumed, is likely far, far greater than what gamers use.

/whataboutism

 

[Sausagemeat]

The waste of electricity usage to their grid. Crypto is a massive waste of electricity.

Its not as big a waste of energy as playing dam computer games. People in Kazakhstan are poor and here you are, all upset that these poor people have the audacity to use the hardware you want for playing games on to improve their lives.

PC gamers can be some of the most toxic people in the world. The comments here prove it.

 

[captaincranky]

PC gamers can be some of the most toxic people in the world. The comments here prove it.

And the miners can be some of the most self righteous and adamantine ..

Not judging mind you. Just saying both sides have their character, "quirks". I'm neither, only an innocent bystander.

 

[Sausagemeat]

And the miners can be some of the most self righteous and adamantine ..

Not judging mind you. Just saying both sides have their character, "quirks". I'm neither, only an innocent bystander.

Im a PC gamer! I do have a nintendo switch (who doesnt?). But I dont own any other consoles, im also no miner as I am privliged enough to make a decent wage from my skills. And yes miners can be *******s. But I dont see many miners going around on forums shaming gamers for wasting energy.

For me, mining is more important than gaming. Gaming is fun, its lovely, I am an enthusiast. But not for one minute would I prioritise gaming over someones income. And sure, some miners are making more than a pretty penny but id still argue that thats still a better outcome than 10 more people able to max out the latest 3D games.

In this case we are talking about Kazakhstanian civilians who have nothing. You have to be a really quite a cold hearted PC gamer to condemn them because you want to max out cyberpunk for less than $1000.

 

[captaincranky]

For me, mining is more important than gaming. Gaming is fun, its lovely, I am an enthusiast. But not for one minute would I prioritise gaming over someones income. And sure, some miners are making more than a pretty penny but id still argue that thats still a better outcome than 10 more people able to max out the latest 3D games.

Still, when you have miners buying up old power stations, you have to draw some sort of conclusion about where need ends, and greed begins. It is fair to say, that as a rule, those at the top of the mining food chain, are "unwilling to share", and only want more. Which creates a stalemate where no one is satisfied

In this case we are talking about Kazakhstanian civilians who have nothing. You have to be a really quite a cold hearted PC gamer to condemn them because you want to max out cyberpunk for less than $1000.

I wouldn't argue that point. But these civilians aren't necessarily the ones hogging up the VGA market.

They deserve our sympathies. But perhaps the really kool hidz with the power stations don't.

As for we in the US, should we step into this "revolution", we'd have to listen to a cascade of bullsh!t about how we think we're "the world's police force". And given Russian interests in this country, gamble on a larger war..

It may sound cold, but, "que, sera sera", is unfortunately. the only viable course of action.

 

[punctualturn]

Is that really relevant?

Many miners out there probably run 24/7 whereas most gamers probably never do that unless they are professionals and have no need to sleep. The net energy consumption of running 24/7, in KWh consumed, is likely far, far greater than what gamers use.

/whataboutism

Oh the irony of your reply, since its a poor attempt to misguide my comment, yet you are simply re-validating it.