06.Jan .2022 10:50

Bitcoin mining hashrate drops 13% following Kazakhstan internet shutdown

Bitcoin mining hashrate drops 13% following Kazakhstan internet shutdown
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Following fuel protests in Kazakhstan, the country reportedly experienced internet blackouts on January 4, leading to a nationwide communications disruption on January 5. Although the country’s presiding cabinet resigned, the internet blackout dealt a severe blow to Bitcoin mining activity.

Kazakh Bitcoin miners witness internet blackout

The Kazakhstan government removed price caps on liquefied petroleum gas used for fuel which doubled its price instantly. The sharp fuel hike sparked protests in the country, as protestors stormed into government buildings, leading to the country’s largest telecommunications provider to shut down access to the internet, FXSTREET reports. 

Kazakhstan currently ranks second in the world in terms of Bitcoin mining hashrate, accounting for about 18% of the network’s hash activity.

Following the shutdown of the nation’s internet, the overall BTC hashrate fell 13.4% from roughly 205,000 petahash per second to 177,330 petahash per second.

Jaran Mellerud, a researcher at Arcane Research stated that in theory, miners could mine without the internet, “but in practice, all the machines in Kazakhstan should be turned off because of the internet shutdown.”

He added that btc.com estimates that Antpool, Poolin, F2Pool and Binance Pool witnessed massive reductions in their hashrate during the time the internet was shut down in Kazakhstan. He stated that “these are the pools widely used by Kazakh miners.

Larry Cermak, the VP of Research at the Block who tweeted about the recent drop in hashrate suggested that the event is unlikely to lead to a decline in crypto prices. He highlighted that “it matters to estimate the impact of an unprecedented event like this.”

Despite recent protests, hardware manufacturer Canaan is looking to expand crypto mining operations in the country, as the company is looking to cooperate with mining firms in Kazakhstan.

Canaan recently announced that it has deployed over 10,000 AvalonMiner units in the country.

Bitcoin price slides 9%

Bitcoin price dropped 9% following the Kazakhstan internet blackout, reaching a swing low of $42,642.

The leading cryptocurrency dropped below a crucial ascending support trend line on the daily chart, and is now searching for a reliable foothold.

If Bitcoin price fails to flip the 61.8% Fibonacci retracement level at $44,078 from resistance to support, BTC could slide lower to tag the 78.6% Fibonacci retracement level at $37,388.