Since China banned cryptocurrency mining in June 2021, neighboring country Kazakhstan has become an important location for Bitcoin miners. The expanse of space, warehouses and factories meant that the mining rigs could be easily set up and powered at a lower cost than other bitcoin-intensive sites.
In January 2022, rising fuel prices sparked deadly riots in Almaty, Kazakhstan’s largest metropolis, with internet shutdowns and Russian-led military troops called into the country in a bid to help stabilize the situation. As a result, 15-20% of global bitcoin mining capacity was completely taken offline and the price of bitcoin fell to a level not seen since September 2021.
The Bitcoin Mining Story So Far…
Since China’s shutdown, the United States has taken the top spot, with one-third of Bitcoin’s hashrate – the computing and processing power used to mine Bitcoin – coming from the country. Kazakhstan, by comparison, was in second place and was responsible for 18% of the hashrate, but after the unrest it fell to around 8%, according to data from BTC.com.
Cryptocurrency news firm Arcane Research estimated that the six-day internet shutdowns could have cost Bitcoin miners in Kazakhstan around $20 million (Tg 8.7 billion).
However, Alan Dorjiyev, president of the National Association of Blockchain and Data Center Industry in Kazakhstan, believes that the problems faced by Bitcoin miners in the country are now over. He says there is no threat of further internet outages, but if accessibility issues arise, mine operators are considering satellite options to ensure there is a backup internet connection.
How secure is the Bitcoin mining future in Kazakhstan?
Not everyone in Kazakhstan is as positive as Dorjiyev about the future of Bitcoin mining in the country.
Almas Chukin, a partner at Visor Capital Kazakhstan – an investment banking group – says: “Generally the mood is not very optimistic in the sector. Many [Kazakhstan Bitcoin miners] are looking for other places to go, mainly in the United States or Russia. However, he adds, “there is great potential in other sectors, including renewable energy, including wind.”
In Russia, the future of Bitcoin mining remains murky, with the country’s central bank proposing a ban on cryptocurrency mining. This could potentially benefit the recovery of the Bitcoin mining sector in Kazakhstan, as the border with Russia would be the most logical place for Bitcoin miners. However, there is no guarantee that miners based in Kazakhstan will not be willing to relocate to the United States, given the profitability of doing business in the country.
Despite this uncertainty, Dorjiyev believes that the future of Bitcoin mining in Kazakhstan is bright, even if the country will fall to fifth or sixth in the world in terms of hashrates.
Right now, Kazakhstan is watching and waiting to see how badly damaged its status as a global Bitcoin mining hub is. If alternative access to internet connections can be established and bitcoin mining is banned in Russia, that might be enough to give the sector a boost. On the other hand, until Kazakhstan is able to resolve its political turmoil, the future of the country’s overall economy, its ability to attract foreign investment, and the future of its Bitcoin mining industry will all be surrounded. of uncertainty.
