When China banned mining bitcoin and other crypto assets in 2021, many mining companies moved to the neighboring country Kazakhstan, which welcomed with move with open arms and saw an economic benefits in supporting growth of crypto industry in the country. Since then, Kazakhstan has become the number two bitcoin mining country with about 18% of global bitcoin mining hash rate. Country with the highest hash rate is the United States.
Earlier today Kazakhstan declared state of emergency as a response to protests that started over fuel prices. According to new reports the demonstration started as a response to doubling of cost of fuel within days after price caps on liquefied petroleum gas were lifted on Saturday. Today, on the fourth day of the demonstrations grew into thousands of people. Worried about the use of messaging apps and protests getting out of control, internet was turned off in most of the country.
It looks like the internet provider, KazakhTelecom was responsible for turning of the internet throughout the country. Despite these efforts protests are continuing. There are reports that hundreds of cars burnt in the streets, and some protesters are setting the government building on fire. I hope this conflict will resolve without any further damage to anybody soon.
When internet is turned off, that directly affects bitcoin mining. Even though this country accounts for about 18% global bitcoin hash rate, such efforts by centralized entities be it government of the internet provides, doesn’t really stop the bitcoin network. Bitcoin network continues to operate as if nothing happened. That is the beauty of decentralization. As the bitcoin mining keeps getting distributed to more and more different geographic locations, this network gets even more resilient and decentralized.
Even the fact that the United States is leading in mining these days is not necessarily a good thing. Ideally, we would want to see more further distribution throughout world covering many geopolitical borders. Yet, even in such situations, for some unknown reasons a country decides to ban bitcoin mining, it is evident that will carry on as if nothing happened and perhaps even get more decentralized.
Kazakhstan is a Central Asian country with a population of about 19 million people and is one of the former Soviet Union countries. While authoritarian elements remain, it was able to build a better economy compared to other countries in the region. Just the fact that it was able to recognize the benefits of bitcoin and crypto for its economy speaks volumes. It is ninth largest country by area in the world and rich with natural resources. Its geographic location and bordering with major economies like China and Russia do put the country in an economically advantageous position. It has a great potential to be a leader in crypto space and innovations.
I hope the current protests and conflicts will resolve soon without further damage and no more people getting hurt, and I hope this will push the country to make better decisions for the people.