Kazakhstan attracts the world’s bitcoin producers after the country’s total blackout
Wednesday’s Internet shutdown in Kazakhstan in response to anti-government protests wiped out nearly 15 percent of the world’s bitcoin creation capacity in one fell swoop. A sharp fall in the price of the main cryptomineries followed, but the causes of which are more diffuse, however. Explanations.


Unexpected consequence of the crisis in Kazakhstan: the wave of concerns raised among holders of cryptocurrencies, whose main are in free fall since Wednesday, January 5.

While on the ground the repression intensified against the demonstrators, whose protests began because of the increase in the price of liquefied petroleum gas (LPG), articles and messages multiplied on specialized sites and forums wondering “Whether the situation in Kazakhstan would worsen the plummeting prices” of cryptocurrencies or “what effect this crisis could have on bitcoin.
Kazakhstan: Second country for bitcoin mining

While these questions may seem out of place in the face of the security situation in Kazakhstan, where demonstrators are risking their lives, this concern illustrates the importance that this small Central Asian country has taken in recent months in the ecosystem of bitcoins and other alternative dematerialized currencies, very popular with speculators. The proof: shortly after the Internet blackout imposed Wednesday throughout the country, more than 13% of the world’s bitcoin “mining” capacity evaporated (mining is the creation of cryptocurrencies through intense computer calculations that require a lot of energy).
This disappearance “provides definitive proof of what was assumed: Kazakhstan has indeed become the second most important country for the creation of cryptocurrencies [after the United States, Editor’s note],” Fortune magazine points out.
“It has been known since April 2021 that a drop in global ‘mining’ capacity can lead to a sharp drop in cryptocurrency prices, and that’s what people are also fearing this time around,” recalls Nathalie Janson, an economist and cryptocurrency specialist at the Neoma Business School, contacted by France 24.

In the spring of last year, Beijing decided to kick out of China the numerous mining companies that had taken up residence there. This hunt for ‘miners’ – decided for environmental reasons and to favor the official Chinese electronic currency – hadled to a drop of almost 50% in the price of bitcoin in two months.

This forced exodus is also the reason for the rise of Kazakhstan in this ecosystem. “These companies were looking for places where the electricity needed to run their many computers wasn’t too expensive, and Kazakhstan – rich in oil and where energy rates are controlled – seemed like the ideal candidate,” says The Block, a trend analysis company in the cryptocurrency market. More than 110 new “mining” companies had applied for permission to set up in Kazakhstan between July and December 2021.
Rising tide of bad news for Kazakhstan
But this time, the situation is different. “We should not believe that the fall in prices since yesterday is directly related to the Internet cut in Kazakhstan. These declines have much more to do with the decisions taken yesterday by the U.S. Federal Reserve (Fed),” said Vincent Boy, analyst at IG France, contacted by France 24. Jerome Powell, the Fed chairman, announced on Wednesday that he would tighten U.S. monetary policy. “This means the end of the free-flowing money environment that had facilitated risk-taking such as investments in cryptocurrencies,” explains Nathalie Janson.

Is the unrest in Kazakhstan hurting bitcoin?
This economist believes, however, that the crisis in Kazakhstan may have “accentuated the downward trend. It is, in fact, “the first time that a geopolitical event has directly and brutally affected a major player in this ecosystem. This could have shaken investor confidence,” says Nathalie Janson. The situation in Kazakhstan would, in this hypothesis, have served as a revelation of certain weaknesses that investors did not necessarily think of.
Especially since at the same time, the government of Kosovo decided to ban the “mining” of bitcoins to try to save energy in a context of soaring gas prices. The small country is far from having the importance of Kazakhstan on the cryptocurrency map, but “the ‘mining’ there was becoming increasingly popular, especially in the north of the country among young people,” says the British BBC.

So between the Fed, Kazakhstan and Kosovo, it’s a sort of tidal wave of bad news that has hit cryptocurrencies. However, it is impossible to know exactly how much the events in Kazakhstan contributed to the fall of bitcoin because “we have no precedent to compare the curves,” notes Nathalie Janson.
On the other hand, it will be interesting, according to her, “to see how quickly these ‘mining’ companies will find an alternative to resume their activities”. This ability to bounce back quickly or not is also a point that intrigues Vincent Boy, the analyst from IG France. For him, this crisis can be considered as the first “full-scale test of the reaction of the players in this ecosystem and investors to a brutal and unexpected event”.