Kazakhstan disconnects Bitcoin (BTC) miners

The world’s second-largest venue for Bitcoin and cryptocurrency miners, the Republic of Kazakhstan, has turned off the internet to mining companies from January 24th to 31st 2021.

The Kazakhstan government has shut off the supply of electricity to Bitcoin miners through the end of January. Amidst the ongoing protests in the Central Asian Country, Bitcoin mining took a major hit as the country saw a nationwide internet shutdown. Unavailability of the internet caused the country’s large cryptocurrency mining network to remain inactive throughout the day, causing a steep drop in the global computing power – the hash rate of the Bitcoin network. Hashrate is a measure of the computational power needed per second for mining a cryptocurrency. With the internet shutdown in Kazakhstan on Thursday, the global hash rate went down by around 14%. 

Energy Grid Out Of Supplies

According to reports, the state-run Kazakhstan Electricity Grid Operating Company (KEGOC) revealed that electricity has been cut off to mining companies until the end of the month. A document signed by KEGOC Managing Director for System Services and NES Development Bekhzan Mukatov read, “the planned supply of electricity to persons engaged in digital mining is completely canceled”. The memorandum was given to 196 power generating, transmission, and energy trading companies based out of the country. 

The latest development unfolds as Kazakhstan faces a severe energy crisis failing to meet power demand, especially during the winter. KEGOC said it will consider rolling the limitations back if the energy situation improves. The power blackout hit the country’s largest city, Almaty, and the southern cities of Shymkent, Taraz, and Taldyqorghan. In Almaty, a brief electricity outage was reported in several districts. Kazakhstan’s system operator of the Unified Power System (KEGOC) said the outage was caused by extra power delivery to the country’s south and southeast after the distribution system faced problems in Kyrgyzstan and Uzbekistan. 

Is Renewable Energy The solution?

Bitcoin mining requires huge computational setups that in turn need a substantial amount of energy to run throughout the day. Due to this, such Bitcoin mining rigs are now being blamed for large energy consumption and resulting carbon emissions in various parts of the world. With the series of crackdowns by China on its Bitcoin mining rigs on these grounds, many miners shifted base to Kazakhstan. Now, most of these mining rigs are powered by energy generated from the country’s coal plants.

The rising energy usage of blockchains and cryptocurrency mining has been facing increasing global scrutiny from governments. Tesla CEO Elon Musk had announced that the company would suspend vehicle purchases using Bitcoin and only resume once mining shifts to more sustainable energy sources while Tesla studies other, more efficient, cryptocurrencies. With countries seeking to use more renewable energy, Central American country Costa Rica revived an obsolete hydroelectric plant to power several crypto mining operations. Last year the state of New York, brought back a 123-year-old hydroelectric power plant to life for Bitcoin mining.