One-Fifth of Global Bitcoin Mining Capacity Taken Out by Kazakhstan Protests

An internet shutdown imposed by the government in Kazakhstan during a deadly crackdown on anti-regime protests has had the knock-on effect of taking out around one-fifth of the world’s Bitcoin mining capacity.

The Central Asian nation accounts for a big chunk of the world’s crypto-mining operations because of its extremely cheap electricity due to its large coal reserves. Many Bitcoin mining operations relocated to Kazakhstan from China last year after authorities banned it.

This week’s protests were sparked by a steep hike in fuel prices and have already seen at least dozens killed according to state media. Meanwhile thousands of Russian troops have been deployed to protect the regime. On Friday, the country’s embattled president Kassym-Jomart Tokayev ordered his security forces to open fire without warning.  

According to analysts, the government’s internet shutdown stopped all Bitcoin and other crypto-mining operations in the country, which accounts for about 15-18 percent of raw computer power plugged into the global network.

A key monitor of internet traffic said Friday that the country was operating less than 5 percent of its online capacity. 

On Thursday, Bitcoin fell to under $43,000 (about £31,600) for the first time since September, at one point losing 8 percent of its value. However, cryptocurrencies across the board have experienced drastic price falls over the last several weeks, totally unrelated to events in Kazakhstan.

Independent information on conditions in Kazakhstan’s largest city of Almaty remained difficult to obtain. International media has been unable to reach much of the conflict to report and dispatches from Russian and Kazakh state media appear biased in favour of the regime. But social media channels are filled with footage of armed clashes between security forces and protestors as well as overflowing hospitals filled with wounded and dead far in excess of of the official casualty figures.

In a belligerent speech on state television, President Tokayev described the violent scenes in Almaty as the work of “terrorists and bandits,” that need to be crushed to restore order.

“What negotiations could there be with criminals and murderers? We had to deal with armed and trained bandits and terrorists, both local and foreign. Therefore, they need to be destroyed, and this will be done in the near future,” he said in a televised address, according to a Washington Post translation. 

Despite Tokayev’s claims in his speech that order had been largely restored, a BBC reporter in Almaty said that gunfire continued to be heard throughout the city in occasionally fierce clashes.  

The protests began on the 2nd of January in the western part of the country after the government lifted price controls on liquefied petroleum, a common car fuel, causing prices to double overnight. 

Within days, the crisis had spread from the mostly rural west of the country to its major cities as protestors demanded the fall of the regime and an end to a close political relationship with Russia, conditions that immediately drew Moscow’s  attention.

Russian troops also continued to pour into the country, according to Russia and Kazakh state television and social media accounts, as part of a “peacekeeping” force. 

It comprises an estimated 2,500 Russian, Belarusian, Armenian and Tajikistan troops as part of the Collective Security Treaty Organisation (CSTO) alliance of former Soviet states dominated by Russia, according to a statement Friday by the CSTO’s spokesman.

The CSTO has said that it will only protect government buildings and infrastructure while Kazakh troops would manage the protests but this reality on the ground could not be confirmed. No commercial flights have been able to land in the country since Wednesday.

Russian President Vladimir Putin has strongly supported CSTO regimes in Belarus and, before 2014, Ukraine with military and political support during attempts to overthrow the regimes by citizens.  Although Russia has surrounded Ukraine with about 100,000 soldiers in a standoff over that country’s orientation towards Western Europe, the Russian Army is large enough to conduct both operations, according to multiple Russian military analysts.