Kazakh riots hit crypto miners amid internet blackout

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The new year for Kaza­khstan — once seen as a promis­ing place for cryp­tocur­ren­cy min­ing — is off to a rocky start.

Riots over fuel prices and pow­er short­ages in Kaza­khstan have led to the gov­ern­ment resign­ing this week, with the main telecom­mu­ni­ca­tions com­pa­ny Kaza­kht­ele­com shut­ting off inter­net access nation­wide on Wednes­day afternoon.

The black­out has appeared to hit the nation’s min­ing sec­tor. Bit­coin hashrates at min­ing pools, includ­ing AntPool, F2Pool, Poolin and Binance Pool, fell by over 10% on Wednesday.

Kaza­khstan last year became a pop­u­lar des­ti­na­tion for relo­ca­tion after China’s cryp­to bans. How­ev­er, the cen­tral Asian nation began expe­ri­enc­ing pow­er short­ages in the fall, with many cryp­to min­ing com­pa­nies strug­gling to stay plugged in. For exam­ple, in Novem­ber, local min­ing com­pa­ny Xive was forced to shut down its site in the south­ern part of the coun­try due to pow­er short­ages.

Now the black­out could fur­ther take a toll on the already strug­gling min­ing sec­tor. Didar Bek­bauov, a co-founder of Xive, told Forkast.News today that the inter­net has been shut down for two days in a row, so “min­ing stopped.”

Bek­bauov said the riots most­ly took place in Almaty, a city in south­ern Kaza­khstan, while cryp­to min­ing sites are main­ly locat­ed in cen­tral and north­ern regions of the coun­try. “So apart from the inter­net cut, no real threat [exists] to the min­ing indus­try,” he said.

Bek­bauov also tweet­ed that no inter­net means no mining.

The inter­net access in Kaza­khstan was par­tial­ly restored at one point but blacked out again on ear­ly Thurs­day morn­ing, accord­ing to net­work track­ing ser­vice Net­Blocks.

How­ev­er, Chi­nese min­ing rig mak­er Canaan — which on Tues­day announced it has deployed over 10,000 min­ing machines in Kaza­khstan — told Forkast.News today its oper­a­tions there remain normal.

“It seems that many min­ers were not pre­pared for an out­age and were caught with­out any redun­dant sys­tems, either mobile inter­net con­nec­tions or Block­stream satel­lite,” Sam­son Mow, chief strat­e­gy offi­cer of Bit­coin tech­nol­o­gy com­pa­ny Block­stream, told Forkast.News today. “We’ve been talk­ing about the dan­gers of out­ages in regions with high con­cen­tra­tions of hashrate for years now, but it seems that the best lessons are the hard ones.”

Mow added that hashrates should come back online as min­ers re-estab­lish con­nec­tions. “I don’t see this as a prompt for anoth­er mass migra­tion of min­ers to anoth­er region.”

Data from the Cam­bridge Cen­tre for Alter­na­tive Finance indi­cat­ed that at the end of August, Kaza­khstan came in sec­ond in terms of glob­al Bit­coin hashrate share, account­ing for 18.1% of the total, up from 8.2% at the end of April.



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