Bitcoin could see some price volatility in the near term resulting from civil unrest going on in Kazakhstan. Following prolonged protests in the Central Asian country, the president declared a shutdown of internet services that has so far resulted in a 12% drop in the hashrate of the Bitcoin network.
Kazakhstan is notable as the second-largest contributor to the hashrate of the Bitcoin network. The Central Asian country that is a neighbor to China accounts for as much as 18% of the hashrate of Bitcoin, behind the US and ahead of Russia. The drop in the hashrate of Bitcoin was pointed out by the VP of research at The Block Crypto, Larry Cemak.
What has been happening in Kazakhstan?
The country has been faced with an energy crisis that is leading to protests. According to reports, thousands of protesters flooded the streets after the government announced a hike in the price of liquified petroleum gas (LPG) that doubled the price. Many Kazakhs found the government’s move outrageous as the country is an exporter of petroleum.
The protesters have overrun government efforts to restore peace, even attacking public buildings and taking over the airport in Almaty, one of the country’s biggest cities. Even a strict state of emergency declared by president Kassym-Jomart Tokayev has done little to quell the protests and the government is now giving in to the demands of the public. The president accepted the government’s resignation on Wednesday and appointed Alikhan Smailov – previously first deputy PM – as acting prime minister.
Protesters raise concerns over the safety of Bitcoin miners in the country
Before the protest began over the price of fuel, the country was already attempting to rein in the energy consumption of Bitcoin miners in the country due to power outages due to increased household energy demand in the winter. In November, the country’s electrical grid operator KEGOC said it would start rationing electricity for registered miners after. They will be the first disconnected if there are grid failures, the quasi-public company said.
Similarly, the government body has also been going after unregistered Bitcoin miners to bring them onboard to the country’s comprehensive miner registration policy. It introduced the policy as a way to regulate the mining industry following runaway growth as miners migrated to Kazakhstan from China last year.
The price of Bitcoin has mostly held steady despite the drop in hashrate.
In a show of resilience, the price of Bitcoin has continued to trade within the same range it has been trading in the past few weeks despite the sharp drop in Bitcoin mining hashrate. Bitcoin is currently trading around $46,300, down 0.95% on the day.
The price of Bitcoin has ranged between $51,600 to $45,800 in the last 2 weeks. The market is still being observed for signs of volatility as a significant drop in hashrate has affected the price of Bitcoin in the past. However, market participants are generally optimistic that prices will surge to new highs this year.