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Bitcoin slumps as Kazakhstan internet shutdown halts crypto mining – Metro.co.uk


The leading cryptocurrency was down by 2.92% in the last 24 hours. (Credits: Getty Images/iStockphoto)

Violent protests and an internet shutdown in Kazakhstan have caused Bitcoin prices to drop below $43,000 on Thursday, the lowest since December 2021.

The central Asian country is the second-largest centre for Bitcoin mining. A nationwide internet shutdown on Wednesday to disrupt the protesters’ communications, quickly led to a knock-on effect, putting Bitcoin miners in the dark.

Within hours of the internet outage, bitcoin’s computational power sank.

The leading cryptocurrency was down by 2.92% in the last 24 hours to hit $41,733 during intraday trading, according to CoinMarketCap. This represents a 39.5% decline from the all-time high price of $69,000 hit in November last year. 

A series of protests over rising fuel prices that started over the weekend turned into protests against corruption, poverty and inequality in the country, resulting in violent clashes between protesters, police and the army

The internet outage and subsequent slump of Bitcoin highlights Kazakhstan’s prominent role in the cryptocurrency ecosystem.

Last year, the nation became the world’s second-largest centre for bitcoin mining after the United States, following a mass exodus of miners from China in May 2021.

As of August, Kazakhstan was hosting 18% of global bitcoin mining, according to Fortune.

Violent protests and an internet shutdown in Kazakhstan has caused Bitcoin prices to drop below $43,000 on Thursday. (Credits: AFP)

Bitcoin mining is done by miners who ‘compete’ using their machines to solve a difficult mathematical problem. ‘Hashrate’ refers to the total combined computational power being used to mine and process transactions on a Proof-of-Work blockchain, such as Bitcoin.

The internet outgate caused the ‘hashrate’ at major crypto mining pools to drop 14% from Tuesday to Thursday, according to data from mining firm BTC.com.

As of August, Kazakhstan was hosting 18% of global Bitcoin mining

The ‘hashrate’ is a key metric for assessing the strength and security of a blockchain network.

The more machines that are performing Bitcoin mining, the higher the hashrate and the harder it becomes for malicious agents to disrupt the network.

The fall in hashrate is likely one of the causes of Bitcoin’s price plunging below $43,000.

Smoke rises from the city hall building during a protest in Almaty, Kazakhstan (Credits: AP)

The Bitcoin industry is not an entirely blameless victim of the protests in Kazakhstan.

Bitcoin mining is an energy-intensive process with a significant proportion of mining activity using non-renewable energy resources like coal – the main source of regional power in Kazakhstan.

Kazakhstan’s crypto mining farms are mostly powered by ageing coal plants that are inefficient and carbon-heavy, causing massive amounts of pollution.

According to the International Energy Agency, Kazakhstan’s emissions per energy unit are higher than what China’s used to be. The agency estimates that China’s coal emitted about 1,000g of CO2 a kilowatt-hour, while Kazakhstan’s emits close to 1,500g.

Last year, the Kazakh government announced plans to crack down on unregistered ‘grey’ miners consuming up to 1.2GW of power – twice as much power as the ‘white’ or officially registered ones.

The slump in Bitcoin price is also attributed to the US Federal Reserve plans to raise interest rates in March. Bitcoin fell below $44,000 immediately after the announcement.



Bitcoin basics: what you need to know about the cryptocurrency

Bitcoin is a completely digital peer-to-peer currency (Credits: Getty Images)

Bitcoin is a type of cryptocurrency, which is a virtual or digital currency – like an online version of cash.

It works without a central bank or any formal regulation and is usually exchanged from person-to-person when it is sold or exchanged.

Way back in 2008, someone called Satoshi Nakamoto published a nine-page white paper detailing a vision for Bitcoin — described as a ‘peer-to-peer electronic cash system’ that would function outside the reach of governments.

A few months later, Nakamoto released software that allowed users to ‘mine’ for the cryptocurrency.

Essentially, mining involves a computationally-intensive process to create new Bitcoins. The more Bitcoins are mined, the harder the process becomes – requiring more computer power which gives Bitcoin its environmentally-negative reputation.

There are only a finite amount of Bitcoins that can ever be produced and circulated which gives it its scarcity and, in theory, value.

People can track their ownership of Bitcoin by using a cryptocurrency wallet, which is a digital way to exchange payments.

It is easy to track as details are stored in a ledger called blockchain, which is publicly accessible and it includes all confirmed transactions.

The value of the cryptocurrency fluctuates all the time in a similar way to more conventional currencies.

 

The significant liquidation in the crypto market has sent the market cap below $2 trillion as it sits at $1.96 trillion, according to CoinMarketCap. 

Goldman Sachs recently noted that Bitcoin is likely to overtake gold in market shares in 2022. 


MORE : Bitcoin uses eight times more electricity than Google and Facebook combined


MORE : Almost 20,000 new Bitcoin ATMs installed in 2021





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