Since protests broke out in Kazakhstan some local Bitcoin mining farms have had to close their doors. Now they might move to Spain.
Bitcoin mining from China to Kazakhstan
In fact, the Kazakh authorities have decided to block access to the Internet, effectively isolating the miners, who are considered large consumers of electricity. The protests were triggered by the rising cost of energy sources, which some attribute to the growing need for mining.
To be fair, the reduction in the hashrate has been very limited, as current levels are more or less the same as in mid-November, although actually after two peak days at the beginning of the year above 200 Eh/s, the hashrate has fallen by around 15%. Considering that around 18% of the hashrate is supposed to be allocated in Kazakhstan, it seems that this recent drop is due to the Kazakh miners shutting down their machines.
However, the same miners who have now placed their farms in Kazakhstan, until last year were largely in China, since until February 2021 less than 4% of the global Bitcoin hashrate was allocated in the country.
It would therefore come as no surprise if these same “Kazakh” miners now decide to move again to other countries more tolerant of their highly energy-intensive activity.
The interrogation of Spanish MEP Muñoz Vidal
For this reason, Spanish MEP María Muñoz Vidal has explicitly proposed that Spain should become a safe destination for cryptocurrency traders as a result of what is happening in Kazakhstan.
Las protestas en Kazajistán tienen repercusiones en todo el mundo: también para el #Bitcoin.
Proponemos que España se posicione como destino seguro de las inversiones en criptomonedas para desarrollar un sector flexible, eficiente y seguro. pic.twitter.com/E2HUu3TtZj
— María Muñoz (@mariadelamiel) January 7, 2022
In particular, Muñoz has submitted a question to the Spanish Chamber of Deputies regarding the impact of the unrest in Kazakhstan on the global cryptocurrency market.
In the question, he writes that Kazakhstan has become the second-largest market for Bitcoin mining, after the United States, due to the decision of Chinese authorities to ban cryptocurrency mining, accounting for around 20% of global Bitcoin mining.
According to Muñoz, the Internet blackout in the country disrupted these mining activities, and as a result, the drop in Bitcoin hashrate by about 14% alone would also cause the price of bitcoin to drop below $43,000.
In reality, it is usually the other way around, i.e. it is not the drop in hashrate that causes the price to fall but the drop in price that causes the hashrate to fall, however the hypothesis that the recent drop in the price of BTC had something to do with the unrest in Kazakhstan has been widely echoed.
Muñoz also recalled that the creation of a National Strategy for Cryptocurrencies was proposed in Spain last year, as well as a High Level Forum with experts in the field to establish a more flexible and favourable regulatory framework for the mining and use of cryptocurrencies.
According to the deputy, Spain should take advantage of the growth potential that cryptocurrencies have, and position the country as “one of the poles of attraction for investments in cryptocurrencies in the European Union and the world”.
Muñoz, however, recalls that the government had refused to consider this proposal, so she asks the Parliament if the government intends to take measures to attract investments and activities in the cryptocurrency mining sector towards Spain which are likely to flee Kazakhstan due to the current unstable situation.
She also asks what data the Spanish government has on the growth of crypto mining in Spain, and on the evolution of the energy efficiency of these processes in the country.
It is worth mentioning that María Muñoz Vidal belongs to a small minority party, which is not directly involved in the current government of the country.