Top crypto mining country, Kazakhstan, faces internet shut down amid fuel protests

Following the significant price increase of liquefied petroleum gas (LPG), one of the world's leading crypto-mining countries was left with only 2% of internet coverage on Wednesday, January 5, 2022.

 

The second-largest oil and gas producer in Eurasia, Kazakhstan, endured the biggest protests since the Soviet Union's disintegration after the fuel prices doubled on Sunday, January 2 – leading to a state of emergency and internet blackout.

Global Bitcoin hash rate at stake

According to the University of Cambridge, Kazakhstan accounts for approximately 21.9% of the global hash rate, holding the second-largest BTC mining hash rate after the US. Until May 2021, China was the absolute leader of the cryptocurrency mining industry, with between 65% and 75% of the world's Bitcoin mining taking place there. In May, Beijing banned crypto-mining in the country, which resulted in many Chinese Bitcoin mining companies moving to Kazakhstan and Bitcoin's global hash rate dropping by over 50%.

Now, with the ongoing Kazakhstan crisis, the Bitcoin mining industry faced another hash rate drop. In an attempt to limit coverage of the escalated anti-government protests, the largest local telecom company, Kazakhtelecom, shut down the internet across the nation (and even cellular networks in some cities).

NetBlocks, an independent internet monitoring company, reported that network connectivity in Kazakhstan had fallen to 2% on Wednesday –  leaving the Kazakh Bitcoin miners without internet. This resulted in the hash rate dropping from 194 EH/s (exa hashes per second) on January 4 to 168 EH/s on January 5, the day of the incident.

President attempts to resolve the situation

Kazakhstan's sharp rise in fuel prices on Sunday was followed by thousands of people storming the government premises. After three days of large-scale protests, president Kassym-Jomart Tokayev dismissed the Kazakhstan prime minister and his entire cabinet on Wednesday and declared a two-week state of emergency (including restrictions on movement, a ban on mass gatherings in the capital Almaty and the province, and an overnight curfew).

Calls to attack civilian and military offices are completely illegal. This is a crime that comes with a punishment.

President of Kazakhstan, Kassym-Jomart Tokayev

The next day, in his attempt to end the protests, the president promised the reestablishment of LPG (that powers many cars in Kazakhstan) price caps – at half of the market price. In his address, Tokayev said: "Dear compatriots, I urge you to show prudence and not succumb to provocations from within and from without, to the euphoria of rallies and permissiveness." He then reminded everyone that: "Calls to attack civilian and military offices are completely illegal" and that "This is a crime that comes with a punishment".

So far, all of the president's attempts to resolve the alarming situation have proven hopeless. Dozens of anti-government protesters lost their lives and thousands have been hurt – among which at least 400 were hospitalized, according to the Kazakh health ministry official announcement on state television. On Thursday, the situation further escalated with Russian paratroopers arriving in Kazakhstan to help quell the protests – the outcome of which is yet to be seen.

Issues that go deeper than the fuel

Protests are rarely about a single problem. This time, we've seen a relatively stable Central Asian country (although often described as authoritarian) becoming a suitable ground for upheaval and violent protests over the course of a single night. Whether the public frustration roots from over 30 years of unchanged leadership strategies (and the fact that there's no effective political opposition in Kazakhstan) or in the already weakened economy (following the COVID-19 pandemic hardships), it's obvious that the Kazakh government has wildly underestimated the anger of its citizens.

The government has been slow because it is divided and has no idea what young people in Kazakhstan really want.

Central Asia expert, Arkady Dubnov

Mukhtar Umbetov, one of Kazakhstan's rights activists, who took part in the protests, stated that: "Kazakhstan is rich, but its natural resources are not working in the interests of all — they work in the interests of a small group of people". With this statement, he reminded the public that the recent events concern more than just fuel, and that protestors seek a larger goal beyond reestablishing affordable LPG prices.

Written by: Danka Delić

With her BA in English Language and Literature, Private Pilot Licence, and passion for researching and writing, Danka brings further diversity to the team. As a former world traveler, she learned to appreciate cyber security and the necessity for digital privacy. Danka is a nature, animal, and written-word lover. She enjoys staying on the go, both mentally and physically, and spends most of her free time either reading or hiking with her dog.

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