Is Kazakhstan Chaos Really What's Leading To Bitcoin Crash?

Massive protests in Kazakhstan on Wednesday due to skyrocketing fuel prices impacted Bitcoin (CRYPTO: BTC), the world’s largest cryptocurrency by market capitalization.

What Happened: The political unrest prompted President Kassym-Jomart Tokayev to disband his government on Wednesday and declare a two-week state of emergency in the Central Asian nation.

State-owned Kazakhtelecom, the country’s biggest telecommunications provider, shut down nationwide access to the internet after the protests began.

The internet blackout led to the overall Bitcoin network hashrate falling 13.4% from about 205,000 petahash per second (PH/s) to 177,330 PH/s, as per data from YCharts.com.

Larry Cermak of the crypto news and research site The Block also tweeted about the fall in the Bitcoin hashrate due to the internet blackout in Kazakhstan.

Internet has been down in Kazahstan for a few hours where roughly 18% if Bitcoin's hashrate is.

Looks like the impact on the hashrate is so far 12% drop just in the last few hours since internet went down. pic.twitter.com/FcTDsJ6R77

— Larry Cermak (@lawmaster) January 5, 2022

See Also: How To Buy Bitcoin (BTC)

Why It Matters: Kazakhstan currently ranks second in the world in terms of the Bitcoin mining hashrate, accounting for about 18% of the network’s hash activity.

Kazakhstan saw an influx of Bitcoin mining companies after neighboring China banned Bitcoin mining last year.

Chinese cryptocurrency mining company BIT Mining Ltd. (NYSE: BTCM) announced in June last year that it is setting up mining operations in Kazakhstan.

In January, computer hardware manufacturer Canaan Inc. (NASDAQ: CAN) said it has entered into strategic collaboration agreements with several crypto mining firms in Kazakhstan and deployed 10,300 AvalonMiner units in the country.

Bitcoin and other major cryptocurrencies fell sharply Wednesday amid concerns that the U.S. Federal Reserve could raise interest rates sooner than anticipated.

Price Action: Bitcoin is down 7.0% during the past 24 hours, trading at $43,021.99 at press time.

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