Yet another market crash crypto this time it would be connected to a very specific political event. Identified by analysts in the street protests in Kazakhstan sparked by the energy crisis that followed the liberalization of energy services.
To better understand what is happening, it is necessary to remember that Kazakhstan is one of the countries that have benefited from Chinese announcement al mining of cryptocurrency. In the country that became independent from the USSR after the fall of the Soviet Union, in fact, the cost of electricity was very low when the provision of the Beijing government hit mining farms like a hammer. The companies in the sector have therefore moved to Kazakhstan, where, however, they are now dealing with one political crisis in full blast.
The energy and political crisis of Kazakhstan
The shortage of electricity has resulted in a dramatic increase in the price of LPG. An escalation such as to push the local population into a real mass revolt against the government. In addition to the assault on the centers of power, guilty of having liberalized the energy market, the rioters engaged in street clashes with the police and the army, deployed to try to stem the situation. Which, however, is literally out of control, with deaths among the demonstrators and many injuries among the government forces. So much so that the proclamation of a state of emergency.
What does mining have to do with the political facts of Kazakhstan?
The political crisis was therefore originated by the energy crisis. On which a considerable impact belongs to mining, or to the activity of mining cryptocurrencies.
As we have mentioned, many of the companies previously operating in China, have erected Kazakhstan as the ideal place to continue the business. It was the Financial Times to recall how, in the course of 2021, it amounts to almost 90 thousand the number of mining companies that have chosen Kazakhstan. So much so as to push analysts to affirm that in the event that the country cuts the power, the Bitcoin mining you can literally stop.
And this is exactly what happened. In fact, the government, in an attempt to stem the protests, has seen fit to check its weapons. Also identified in the use of mobile phones, the Internet and social media. To prevent it from working has disabled everything. Mining farms ended up in this turmoil, literally blocked by events. A framework which has gone down with great force on the crypto market.
The collapse of the Bitcoin hashrate
The first result of the Kazakh events was the notable drop in the hashrate of Bitcoin. It Coinwartz disagrees, Coingape instead indicated it in the order of 12%. A data of no small importance, such as to make it clear what could happen if countries where electricity is cheap make the same choice as China.
Recently, for example, Iceland has decided to cut the energy supplies reserved for mining farms. A decisive move in order to avoid a crisis on the model ofIran. In fact, in the Middle Eastern country, some blackouts occurred at the beginning of last year, caused precisely by the excess consumption of mining.
A picture that is beginning to frighten, especially in the light of what is happening in Europe. In fact, electricity bills are literally taking off, for example in Italy. Again due to the liberalization of services, as well as the geopolitical situation. If things get worse, Countries like the Nordic ones could follow Beijing's example. This is why BTC continues to lose ground.