Chaos erupted in Kazakhstan this week and bitcoin mining was shut down as protests over fuel prices have sparked widespread unrest across the country.
Kazakhstan, the Central Asian country of around 20 million people, is currently experiencing unprecedented disruption. This has led to the internet being suspended by the authorities, leading to a complete shutdown of all the Kazakhstan bitcoin mining operations, which normally supply as much as 15% of the world’s bitcoin mining output.
The disruption comes at a bad time for many miners who relatively recently had left China after the mining prohibition there, in order to set up shop across the border in a country where cheap energy, mainly from coal mines, was a real advantage.
However, one thing has been learnt. Shutting down such a large part of the bitcoin mining network unexpectedly has not impacted on the bitcoin network at all – in fact it has not even skipped a beat.
After we have had the mass migration from China, it remains to be seen whether Kazakh miners will now move on yet again in order to find a more stable country to host their activities.
According to a CNBC article from Thursday, the US might well be that country. Although, according to Kevin Zhang of Foundry, a company that helped to bring mining equipment worth $400 million into North America:
“What’s concerning is that previous congestion and bottlenecks around hosting capacity (readily available space to plug machines into) will be squeezed that much tighter. There’s a tremendous amount of pressure and demand for hosting capacity,”
The CNBC article posits that Kazakhstan may only be a temporary stop for miners who would eventually like to see the West as their main goal for a permanent home.
The Kazakh government is not happy with the new and much larger bitcoin mining operation that has been set up within its borders, and lawmakers are about to levy extra taxes on crypto miners this year.
In the long run, it might well be that this is just an evolution of crypto mining, as eventually miners migrate to the countries where they can use cheap, green energy, and where the political system is favourable to what they do.
The big takeaway is that as bitcoin mining goes through these growing pains, the network is surviving the disruptions and is being battle tested to become even more resilient as time goes on.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
