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Bitcoin price plunges as Kazakhstan cuts internet amid violence against crypto miners

BITCOIN crashed after Kazakhstan cut off internet supplies to quell violent anti-government protests, affecting crypto miners.

The coveted cryptocurrency fell below $42,000 on Thursday, down from a high of $69,000 in early November of last year – cleaning investors.

Bitcoin price plunges again, but this time is believed to be related to the conflict in Kazakhstan

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Bitcoin price plunges again, but this time is believed to be related to the conflict in KazakhstanCredit: AFP
A bus caught fire after a clash, on a street in Almaty

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A bus caught fire after a clash, on a street in AlmatyCredit: AP

Experts attribute this drop to Kazakhstan cutting off internet supplies to quell recent violent protests against the government and President Kassym-Jomart Tokayev.

Russia’s “peacekeeping” troops have landed in the financial capital Almaty after protests over recent gas price hikes turned deadly.

A total of 13 policemen were killed – and the Kazakh government says three officers had their heads cut off.

The recent blackout in Kazakhstan – the second largest Bitcoin mining hub after the US, accounted for 18% of total global Bitcoin production last August, according to Reuters — has seen one-fifth of the crypto network go dark.

With internet access cut off, the number of computers needed to maintain the network has dropped dramatically.

According to The Block’s Larry Cermak, the ban led to a 12% decrease in “hashrate” – a term used to describe the amount of computing power required to run the Bitcoin network.

Most read in The Irish Sun

The looming news of a rate hike by the US Federal Reserve is also believed to be behind the recent drop, according to Sky News.

Minutes of this week’s Federal Reserve meeting signaled a potential US interest rate hike – sending a wide range of assets from cryptocurrencies to stocks plummeting in value.

Computers are needed for complex mathematical calculations to get a new Bitcoin into circulation online.

This process is also known as mining and it requires a large amount of energy.

Bitcoin mining is beset by controversy because of the amount of fossil fuels required to mine the cryptocurrency and its negative impact on the environment.

5 Risks When Investing in Cryptocurrencies

The Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.

  • Consumer protection: Some crypto-based high-return promotional investments may not be subject to regulation beyond anti-money laundering requirements.
  • Price volatility: Significant price volatility in cryptocurrencies, combined with the inherent difficulties in valuing cryptocurrencies reliably, puts consumers at high risk of loss.
  • Product complexity: The complexity of some crypto-related products and services can make it difficult for consumers to understand the risk. There is no guarantee that cryptocurrency can be converted back to cash. Converting a cryptocurrency back into cash depends on the demand and supply available in the market.
  • Fees and charges: Consumers should consider the impact of fees and charges on their investment, which may be more than the impact of fees and charges on managed investment products.
  • Marketing materials: Companies can overstate product returns or minimize the risk involved.

China was once the largest Bitcoin mining country until a state crackdown on the practice sent miners to Kazakhstan, where fossil fuel energy is abundant and cheap.

Unfortunately for these miners, Kazakhstan is currently experiencing a period of civil unrest.

Protesters have been engaged in violent clashes with the country’s security forces since January 2.

Kazakstan President Tokayev is said to have enforced the order to block internet access on January 6.

The crypto market was in a red sea on Friday morning with a lot of other popular cryptocurrencies crashing.

Ethereum is the second largest cryptocurrency and has dropped 12%.

Kazakhstan protesters want to see President Kassym-Jomart Tokayev removed from power

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Kazakhstan protesters want to see President Kassym-Jomart Tokayev removed from powerCredit: Reuters
President Tokayev called on the Russian military to intervene

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President Tokayev called on the Russian military to interveneCredit: AP

https://www.thesun.ie/money/8175399/bitcoin-crash-amid-kazakhstan-internet-cut-out/ Bitcoin price plunges as Kazakhstan cuts internet amid violence against crypto miners

Fry Electronics Team

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