Number Two Bitcoin Mining Country Kazakhstan Shuts Down Internet

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(Edited)

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When China banned mining bitcoin and other crypto assets in 2021, many mining companies moved to the neighboring country Kazakhstan, which welcomed with move with open arms and saw an economic benefits in supporting growth of crypto industry in the country. Since then, Kazakhstan has become the number two bitcoin mining country with about 18% of global bitcoin mining hash rate. Country with the highest hash rate is the United States.

Earlier today Kazakhstan declared state of emergency as a response to protests that started over fuel prices. According to new reports the demonstration started as a response to doubling of cost of fuel within days after price caps on liquefied petroleum gas were lifted on Saturday. Today, on the fourth day of the demonstrations grew into thousands of people. Worried about the use of messaging apps and protests getting out of control, internet was turned off in most of the country.

It looks like the internet provider, KazakhTelecom was responsible for turning of the internet throughout the country. Despite these efforts protests are continuing. There are reports that hundreds of cars burnt in the streets, and some protesters are setting the government building on fire. I hope this conflict will resolve without any further damage to anybody soon.

When internet is turned off, that directly affects bitcoin mining. Even though this country accounts for about 18% global bitcoin hash rate, such efforts by centralized entities be it government of the internet provides, doesn’t really stop the bitcoin network. Bitcoin network continues to operate as if nothing happened. That is the beauty of decentralization. As the bitcoin mining keeps getting distributed to more and more different geographic locations, this network gets even more resilient and decentralized.

Even the fact that the United States is leading in mining these days is not necessarily a good thing. Ideally, we would want to see more further distribution throughout world covering many geopolitical borders. Yet, even in such situations, for some unknown reasons a country decides to ban bitcoin mining, it is evident that will carry on as if nothing happened and perhaps even get more decentralized.

Kazakhstan is a Central Asian country with a population of about 19 million people and is one of the former Soviet Union countries. While authoritarian elements remain, it was able to build a better economy compared to other countries in the region. Just the fact that it was able to recognize the benefits of bitcoin and crypto for its economy speaks volumes. It is ninth largest country by area in the world and rich with natural resources. Its geographic location and bordering with major economies like China and Russia do put the country in an economically advantageous position. It has a great potential to be a leader in crypto space and innovations.

I hope the current protests and conflicts will resolve soon without further damage and no more people getting hurt, and I hope this will push the country to make better decisions for the people.



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76 comments
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Rioting seems reasonable if there is no Internet! lol.

More to the point though, I think we see more nations fall into hard times soon, and while Bitcoin may well do fine, if it is YOUR BTC you can't get to that creates some major problem, but I'm sure those with money in banks are having the same problems.

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lol, yes shutting down internet is a bad idea. What else will people do, go out to the streets.

Good point, access to funds is important.

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That's a good point. I guess the difference is that if you can escape the troubled-nation then you should be able to access your BTC from anywhere else... whereas if your nation's banks have been seized/stopped/no internet, then you're stuck regardless of whereever you might physically get to.

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It's a big blow to the country but I believe the issue will be resolved.

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If the UK is going restrict the individual ownership of cars then this doesn't surprise me one bit. If the oligarchy wants to control you, what better way then to control your mode of transport. Different programs in different regions, same outcome in the end.

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wow really? why would they want to restrict individual ownership of cars? No more property rights in the UK?

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(Edited)

All the news in Russia are about Kazakhstan. I used to see everything like a show from authorities. Most mass media are writing that people there are so strong, and they took all the power and even won all the military and kind of attacking the buildings of authorities. I watch now a video where the guy explain in Russian that's all is a show. Simple people can't win the army without weapon and how strict are rules there. And now I learned from you that they have a lot of bitcoin mining there, and they turned off the internet. So, everything is clear. That's all for sure planned to do what they are doing now just to put more restrictions on people and to close the country. It's expected in Russia as well. As always there will be victims and in the end the same people will rule just with other puppets.

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That is crazy. I hope everything resolves soon peacefully.

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It would be interesting to see if a bunch of other countries support bitcoin mining.

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Interesting. I always find it funny to think of the internet getting shut down, like it's just one massive switch that's labeled "internet." I don't understand how it actually works but that's how I invision it.

It's not funny what's happening though snd I don't mean to make light of the situation. Hopefully things get resolved soon. The situation definitely demonstrates the power of decentralization

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Lol it's a very big red button on the presidents desk.

Or the intelligence agencies collectively start playing League of Legends while simultaneously streaming Netflix and downloading torrents. It slows down internet for everyone else.

I think they probably have a talk with the countries internet service providers. Most people pay someone for their internet.

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Hahaha yeah that's pretty close to how I picture it 😂

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I was gonna have an interview for a freelance job at a startup from Kazakhstan and I just saw what is happening there. I hope their people manage to keep going and stay well, regardless of work, now that I have met some Khazakh people I feel as it were a friend having issues.

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Your posts are so informative and you have broader vision of things. I hope these issues will be resolved soon.

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Ahhhh, possibly really silly question... but if 18% of the hashrate is suddenly unavailable, I assume that pushes up transaction fees? And maybe mining rewards for the rest of the 82%? Or does nothing really change because BTC has more hashrate available than the network needs?

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Good questions. But they are above my pay grade, lol. I would like to know the answers to them too. Let me know if you find out. :)

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The govt working with the network provider's to turn off the internet at such moment is a direct infringement on the right to communication Article 19 UN chatter. The govt must be called to order! I hope various crypto mining institutions look more into various ways to spread mining activities across the globe backed by renewable energy consumption practices as this would even help create more jobs, increase crypto activities and adoption.

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Things are heating up 😊

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That’s not good. You may need to airdrop some ecencies to cool things down. Oh wait, no internet no airdrops.

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I never thought any country would be dumb enough to turn off the internet. I think I would be out on the streets as well if I didn't have it. I hope everything gets resolved soon enough as well and the internet comes back. After all, we are all use to using the internet and it seriously messes up what we can do in everyday life.

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Interesting! I like to read and learn more, so I am following you now 😁.

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Is there a way to create our own Internet Provider?

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Think that in Italy they are requiring the Green Pass to go to the esthetician (that luckily is not my deal, but for my wife it is), to go shopping and they are now evaluating to make it necessary to go to Public Offices and to the Bank (that is luckily non of my business too).

I have too, two mining installations. They suggested me Kazakhstan and luckily I refused while the previous Director of the business was really oriented to go there. I am not judging: it's too easy expressing judgements after things happened BUT I am saying that if it was not my merit, I have been very lucky!

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Internet and phone service was turned off in my city for over 2 months. Nearly lost my mind even though they let us have little service but it was mostly useless.

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What can I say other then government(s) don't have the power they think they have.
People can not and will not be controlled.

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That's weird. I just spent several months offline, again.

I think the only thing I burnt was toast.

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It's a matter of scaling.
When you go offline solo you burn a toast.
When you go offline with a small group of friends or family, you burn wood for camp fire.
When you go offline with a crowd, you burn cars and buildings.
Please stay online and be safe.

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(Edited)

You just made me realize something. The reason there's so many forest fires now in the northern regions is due to the fact there's no service. I totally get it now!

And Elon Musk is trying to fix it with Starlink!

Fascinating.

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Yup 100%! Starlink combined with Neuralink will solve all of world’s problems and we can happily depart to Mars, finally!

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So much better than just going for a quick float then getting an awkward hug from Bezos!

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Lol "Meta, bringing peace and prosperity because without a metaverse people burn shit"

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I love burned toast, it's really weird, can't be healthy

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You can scrape the burnt off and snort it to get the maximum effect. But don't actually do that. I'm just a random idiot from the internet. People like me don't know what we're talking about.

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If you put honey on a burned toast it becomes black and golden super food pinkyswear

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You know what though? I believe it. In moderation of course.

I prefer my toast golden, not burnt. Peanut butter, honey, cocoa, cinnamon. None of that white bread garbage though. The expensive stuff with the chunks of grain. That's good eatin.

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(Edited)

I like Kazak traditional stringed instruments…this here will give me a reason to learn more about their culture.

Hope they get internet back soon. While I think it’s good to have an internet detox, even for a month or two, I would not like the idea of it being imposed. Strategically it sounds like a pretty bad idea too.

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such efforts by centralized entities be it government of the internet provides, doesn’t really stop the bitcoin network. Bitcoin network continues to operate as if nothing happened. That is the beauty of decentralization. As the bitcoin mining keeps getting distributed to more and more different geographic locations, this network gets even more resilient and decentralized.

Though its true that, it keeps getting distributed, people of that country definitely stop paying attention, because at the end, anything that is not usable is value less - be it for some specific people. For example, India is planning to bring a new bill - now, if I cannot use the money that I have, what purpose it solves. At the end, we still need regulators approval to spend those money as a law abiding person. Unfortunately, the regulators don't understand it - they do not have any negative impact, instead they will get more tax. Still...

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Yes, governments always lags behind and slow to act. But mainly it seems more about taxes and money for them anyway. As time goes by newer generations replace the current officials and they have more educated approach. But even then they will lag behind what future brings. lol. cycle continues.

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Kazakhstan has become the number two bitcoin mining country with about 18% of global bitcoin mining hash rate.

Wow! I had no idea of this fact whatsoever.

Very sad to hear when people are in turmoil like this, hopefully the people will be back online soon and things calm down.

Cg

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I didn't know either. Apparently, hash rates are easy to move around.

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I see, and I suppose there is cheap electricity there for the miners. The fact that these riots are about doubling fuel prices indicates that this could have long lasting effects on their BTC production in the future.

Oh by the way I'm called something different on Twitter, my old account got shadow banned.

I'm the NFTOhGee guy :)

Cg

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Nothing in the Israeli news about this important subject. Thanks for bringing it up here.

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I live in the Russian region bordering Kazakhstan, where revolutionary events are now taking place. I hope that the riots and unrest in the neighboring state will end without a lot of blood and the fire will not spread to Russia.

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Yes, I hope so too. Looks like Russia sent some military there.

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Quite right. The troops were sent by Russia and several other countries: Armenia, Belarus.

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This is really sad news that this is going on to another part of the world. There is already covid plus this in Khazakstan. Recently my country Philippines has just been ravaged by typhoon Odette and we are recovering slowly. I'm wishing that Kazakhstan will also recover 'cause we need everyone onboard the crypto revolution.

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Do we have anyone on hive here who's on the ground and can report that is actually happening?

I have some questions for smarter people too. What can be done to hedge against the probability of one's country just switching off the internet. Can parallel structures be built? Or, say get back to using IPs if it's just DNS that is switched off? (I am blond, feel free to tell me if I'm way off track here)..

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Well one way to skirt all these internet shutdowns done by these countries is to implement some sort of satellite based internet where the earth node can be made with standard easy to get electronic parts so people in the affected country can assemble such satellite transceiver by themselves.
Another way would be to use Spacex's Starklink service, but this requires you to subscribe to their internet data plan and also have a satellite dish in your possesion to transmit and receive the data.

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One aspect in this article which I like to see more analysis is the issue of gas prices, political instability and the reasoning in committing so much hardware to an unstable country like Kazakhstan. Is there any correlation between fuel prices and bitcoin mining load on the grid?

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As far as I know I think Kazakhstan has been one of the most stable countries among former Soviet Union ones.

At this time of the year gas is always in high demand, and recently global gas prices went up significantly.

I am not sure, but I would assume they sell natural gas and oil to Europe and elsewhere through Russian energy companies.

It comes down to balancing the energy needs of the local population and business vs selling to foreign countries for higher prices.

I doubt there is a correlation to mining though.

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Oh my god, I'm so sorry for what I read. Why do governments hurt their citizens so much? However, they are chosen to provide people with a more prosperous life.

There is one more thing I really don't understand. Why are governments so against crypto? For example, shopping with crypto is prohibited in my country. This is ridiculous. This technology was born and now exists in our lives. Why run away from it? However, whichever state embraces this crypto world as soon as possible, it will be the leader in the future.

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One of the great powers governments enjoy is printing money. Some governments see crypto as a threat to this power. But also, I think many still do not understand that governments can actually benefit from crypto as well. They will have to realize that sooner than later.

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I liken it to the crypto system revolution. The states that fall behind this loss will regret it very much in the future. I think the lobbies of the banks must be very strong and not wanted by the banks.

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It's getting real down there, hope that's not only that starting. As I'm reading right now, it seems Russia is going in to "stabilize" the situation. HolySmokes...

Death, Despair and War is always so far away until it suddenly just isn't anymore.

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Yes, I heard Russia already sent some military.

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That is conserning, freedom and territory is nothing that comes without a fight.

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Kazakhstan is an important mining center. If it continues like this, network density and fees will increase.

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Really cool to know that Bitcoin is gonna absorb all this and still survive. Lol.

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