Kazakhstan, the second largest Bitcoin miner in the world, has shut down its crypto mines until the end of January.
State-owned electricity supplier KEGOC took the decision to cut power to miners after millions were affected by power outages in three Central Asian countries last week.
But the crypto miners have accused KEGOC of blaming them for the power supply problems, estimating losses due to inactivity at around $1 million a day.
The power outage in Central Asia last week left millions of people without power, which affected traffic control in several regions. Pictured, Bishkek, Kyrgyzstan
Shoppers in Bishkek, Kyrgyzstan, during a massive power outage in Central Asia that wreaked havoc on the region for several hours
Bitcoins are created by a process known as “mining” which involves computers solving difficult mathematical problems with a 64-digit solution. Each time a new mathematical problem is solved, a new Bitcoin is produced. Some people create powerful computers for the sole purpose of creating Bitcoins, which can require an enormous amount of energy to operate. (File Image)
Sergey Putra, vice-president of the Association of Blockchain and Data Center Industry of the Republic of Kazakhstan (NABDC), told the state-run Khabar news agency: “Miners do not provide a fantastic load”.
“They have not multiplied by two or three the electricity consumption.
“It’s only 7% of the entire market in Kazakhstan, all miners.
“The equipment is up and running all the time. It does not happen that this equipment works at this time and consumes three kW, two the next hour and then consumes 10 kW for two minutes.
“No, it still has constant power consumption.”
Kazakhstan, Uzbekistan and Kyrgyzstan, the three countries that suffered blackouts and lost heating supplies, have systems interconnected by the Soviet-era power grid.
The outage caused chaos across the region for several hours, with metro trains stuck in tunnels and skiers in lifts, closed airports, district heating and idle tap water pumps and traffic lights extinct.
With power largely restored and the technical cause of the problem yet to be determined, Kazakh crypto miners have accused KEGOC of using them as a scapegoat, Eurasianet reports.
Alan Dorjiyev, chairman of the NABDC, told the news site that KEGOC cut off the miners’ power supply as early as January 17.
He said, “Whenever there is a problem in the country’s power grid, KEGOC points the finger at miners. Now they have an alibi.
People look through a glass door at a shop following a massive power outage after an unspecified accident in power grids in Bishkek, Kyrgyzstan on January 25
A copy of the KEGOC notice announcing the January 24-31 blackout was posted on Telegram by Kazakh journalist Serikzhan Mauletbay.
It was captioned: “The 69 companies officially registered as “miners” in the Republic of Kazakhstan have received notification letters from KEGOC.
“The reason for the shutdown, which is stated in the letter, is called ‘a tense situation with maintaining a balance between power and capacity’.
Earlier this month, the price of Bitcoin fell to levels not seen since September amid continued power cuts in crisis-ridden Kazakhstan.
Jaran Mellerud, an analyst at cryptocurrency news firm Arcane Research, told Wired he estimates internet shutdowns amid political unrest earlier this month may have cost Kazakh miners around $20 million. of dollars ; $4.8 million for every 24 hours without internet.
The world’s most widely used cryptocurrency lost up to 8% in value and fell below $41,000 (£30,100) as investors dumped their cryptocurrencies, partly boosted by the ongoing events in the Central Asian nation.
Hundreds of people died, public buildings across Kazakhstan were ransacked and set on fire in the worst violence suffered by the former Soviet republic in 30 years of independence.
An estimated 5,000 people were arrested following the unrest which had been fueled by public anger at the country of 19 million former rulers Nursultan Nazarbayev and his family amassing a huge fortune, and at a price hike in gasoline.
About 2,500 Russian “peacekeepers” from the Russian-led Collective Security Treaty Organization (CSTO) have been called upon by President Kassym-Jomart Tokayev.
Dozens of people have died and public buildings across Kazakhstan have been ransacked and set on fire in the worst violence suffered by the former Soviet republic in 30 years of independence
Around 5,000 people were arrested following political unrest in Kazakhstan earlier this month
The chaos in the country, which has seen one internet outage after another, has had a huge ripple effect on the Bitcoin network.
According to cybersecurity watchdog Netblocks, Kazakhstan’s national internet connectivity was only 5% of ordinary levels on January 7, making it impossible to mine Bitcoin.
Bitcoin mining is the process by which people can create new coins. This is also how new transactions are confirmed by the Bitcoin network.
It works by using sophisticated hardware which contains an extremely complex computational mathematical problem.
Kazakhstan, which has become a popular Bitcoin hub since last May when China banned crypto mining, has been plagued with power outages and inadequate facilities for the past few months, reports the Financial Times.
According to estimates by the country’s energy ministry, electricity demand has increased by 8% since the start of 2021, compared to an annual increase of 1-2% in recent years.
Power-intensive mining machinery had caused blackouts and blackouts in regions as early as October.
As well as struggling with the power grid, some miners speaking to Wired have also complained that when idle machines can freeze as winter temperatures in the country can drop to -40F (-40C ).