Kazakhstan sends the cryptocurrency market and Bitcoin’s price into a tailspin, with street protests triggered by the energy crisis following market liberalization.
Bitcoin in the red
At the time of writing, Bitcoin is losing 6% at $43,400 and Ethereum is losing 7.3% at $3,500. The worst performers are Solana, Terra (LUNA), Crypto.com (CRO), Cosmos (ATOM), with losses of up to 10%.
The wave of selling was probably triggered by the energy crisis in Kazakhstan, which has become one of the places where Bitcoin mining has moved to due to the ban imposed by China.
Bitcoin mining among the causes of Kazakhstan’s crisis
Kazakhstan is on the verge of an energy and political crisis, as protests related to rising LPG prices have erupted into assaults on government buildings, clashes with the army, deaths and arrests, and the declaration of a state of emergency.
To cut off communications, the government has disabled the internet, mobile phones and social networks, hoping that this will prevent the rioters from coordinating. This has also led to the blocking of mining activities, which in Kazakhstan have found fertile ground precisely because of the high presence of cheap fuels.
But this is the effect and also the cause of the crises, because mining companies absorb a monstrous amount of electricity needed to complete the algorithms that enable the validation of transactions and the mining of blocks. This led the price to rise.
According to the Financial Times, by 2021 nearly 90,000 crypto mining companies have chosen Kazakhstan after being forced out of China. If Kazakhstan shuts down the power and stops the internet, Bitcoin mining risks coming to a halt.
A yardstick will be provided by the hashrate, which from the latest Coinwartz graphs actually looks stable, while according to Coingape the blackout has already led to a 12% drop. Certainly, the impact on the hashrate would be the measure of how much the crisis in Kazakhstan could also weigh on BTC mining.
It has certainly taken its toll on the price, leading Bitcoin and other cryptocurrencies to lose important support levels. It will now be crucial for Bitcoin to keep its nerve and not fall back below $40,000.