Monday, May 16

Kazakhstan cut power supply shutting down Bitcoin miners

The Kazakh government has cut off electricity supply to Bitcoin miners until the end of January. Amid ongoing protests in the Central Asian country, Bitcoin mining has been affected by internet shutdowns across the country. The unavailability of the internet caused the country’s large cryptocurrency mining network to sit idle around the clock. Which caused a sharp drop in global computing power, the hash rate of the Bitcoin network.

Hash rate is a measure of the computing power required per second to mine a cryptocurrency. With the shutdown of the internet in Kazakhstan, the global hash rate dropped by around 14%.

Kazakhstan’s popularity among Bitcoin miners — the country was home to the world’s second largest mining industry in August — has already put its energy infrastructure to the test. Which prompted the government to impose heavy limits on the energy-intensive industry last year. The central Asian nation began attracting miners after China cracked down on the practice.

No electricity for Bitcoin miners until the end of the month

According to reports there is a document signed by KEGOC General Manager for System Services and NES Development, Bekhzan Mukatov. Where it is read that “the planned electricity supply for people who are engaged in digital mining is completely canceled.” The memorandum was delivered to 196 power generation, transmission and marketing companies based outside the country.

The blackout occurred after a major power line in southern Kazakhstan was disconnected. Although country governments have said that power has been restored, Bitcoin miners in Kazakhstan will not have access to it for the foreseeable future.

Kazakhstan an attractive destination for mining

Thanks to its natural gas and coal deposits, Kazakhstan has some of the lowest electricity prices in the world. Thus helping the miners to obtain more profits. Mining is an energy-intensive process in which individuals and businesses use specialized hardware to perform calculations that secure the Bitcoin network and mint BTC.

The blackout affected the country’s largest city, Almaty, and the southern cities of Shymkent, Taraz and Taldyqorghan. In Almaty, a short power outage was reported in several districts. The operator of the Unified Power System of Kazakhstan (KEGOC) said the blackout was due to extra power supply to the south and southeast of the country after the distribution system had problems in Kyrgyzstan and Uzbekistan.

For their part, according to government estimates from the fall of 2021, cryptocurrency miners used 8% of the available energy supply in Kazakhstan. More than half of that comes from “grey” operations that have refused to register due to tax requirements and the prospect of increased government oversight.