Mining-Hochburg
Why the Kazakhstan crisis has consequences for Bitcoin
Bitcoin is the most important cryptocurrency in the world
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The violent unrest in Kazakhstan is also having an impact on the cryptocurrency business: The country is a stronghold for mining new Bitcoin. The current course crash has another reason.
These are dramatic images that have been reaching us from Kazakhstan for days. Anger over the rise in fuel prices led to violent protests against the government, security forces were shooting demonstrators with sharp weapons, and Russia was sending soldiers. There are dead and injured.
In addition to the political and human dramas, the crisis in the former Soviet republic also has a surprising side effect: The business with the crypto currency Bitcoin is being shaken up. Because what very few should know: Kazakhstan is the second most important country in the world for mining new Bitcoin. According to data from the University of Cambridge, Bitcoin mining is only more actively pursued in the USA; in August 2021, almost a fifth of the world’s Bitcoin computing power came from Kazakhstan. The former number one China, on the other hand, has lost a lot of its importance in the past year because the government is acting restrictively against Bitcoin miners.
New Bitcoin are created through complex computing operations that require enormous computer capacities. Due to the massive unrest in the country, the Kazakh government temporarily cut the Internet this week. In large crypto mining groups, the so-called hashrate, a unit of measurement for the computing power used, then fell by 14 percent on Thursday, reports Archyde.com.
Bitcoin course smears
There is also a stir that the value of Bitcoin also smeared this week. On Friday, the rate temporarily fell below $ 41,000, its lowest level in more than three months. In November the price was still around $ 69,000, since then it has been down 40 percent.
However, the two phenomena are not directly related. A failure of the Kazakh crypto miners initially only means that it will be cheaper for prospectors elsewhere to participate in the power-intensive computing operations, which is why the gap was probably filled quickly. And even if mining comes to a standstill and fewer new Bitcoin come onto the market, that would theoretically speak for an increase in the price.
Experts therefore see the reasons for the crash of the Bitcoin rate elsewhere – especially in US monetary policy. In the world’s largest economy, an increasing departure from loose monetary policy and rising interest rates are expected. This usually depresses the prices of crypto currencies, and Ether has also recently lost value. Bitcoin has already started to slide since its all-time high in early November – long before the Kazakhstan crisis. Nobody can really predict whether the downward trend will continue or whether new record heights will soon be reached again.
Sources: Archyde.com / DPA / Cambridge University