January 22, 2022 6:55 pm

Revolt in Kazakhstan sends cryptocurrencies reeling

The popular revolt and the repression of the regime in Kazakhstan have shaken the world market for cryptocurrencies, with pronounced falls in the value of these assets, including the famous bitcóin. One of the main reasons for these turbulences in cryptocurrencies is that this Central Asian republic, until very recently one of the most stable and controlled of the former Soviet Union in Central Asia, is currently where more than 18% of the mining of bitcoin, the main place for that new industry only after the United States.

The Kazakh President, Kassym Jomart Tokáyev, which has described the protesters as “terrorists” trained abroad, has cut off access

to the internet in the country, which significantly hinders the operations of creation and maintenance of cryptocurrencies. The Kazakh regime, which continues to control the dictator and former president from the shadows Nursultan Nazarbayev, thus seeks to make it difficult to organize protests through social networks and other digital platforms. Protesters are protesting rising fuel prices and other famines and shortages.

After the Chinese dictatorship decided to curb the cryptocurrency industry in mid-2021, much of this activity moved to neighboring Kazakhstan. Without free elections, it is the largest economy in Central Asia, and is highly dependent on the Petroleum, which represents 21% of its GDP, according to data from the World Bank. The estimated growth for this year exceeds 3.7%. It is also the world’s largest uranium producer and also exports iron and coal.

What is cryptocurrency mining

What is known as cryptocurrency mining is a very complex process, which requires powerful computers Y bandwidth, to put new virtual currencies into circulation. These computers are put to solve a series of complex mathematical operations to create what is known as a block, which end up forming a chain of blocks, or “blockchain” in English. The «blockchain» is a digital technology that guarantees the veracity of internet operations, that is, it ensures and strengthens the value of those virtual currencies.

There is no single virtual currency, although the main one is bitcoin, created in 2009 and which serves as a cryptocurrency and payment system without a central bank or sole administrator. On January 4, two days after the protests began, it reached a value of 42,000 euros for each coin. On Friday it plunged to 36,000 euros, figures similar to those of the end of September. Other virtual currencies also fell on Friday: Ethereum, for example, 6.8% and solana 7.7%.

Police car on fire during altercations in Kazakhstan – Reuters

The truth is that the price Of cryptocurrencies does not depend directly on a single factor, not even on the ability to mine them, but according to analysts these currencies end up behaving in a similar way to stock markets, with significant fluctuations. Unrest in Kazakhstan joins recent warnings from the Federal Reserve that it will put an end to the large stimuli approved in times of pandemic.

The 18% figure for bitcoin mining in Kazakhstan comes from a British center under the University of Cambridge that analyzes alternative finance systems. According to Michel Rauchs, an analyst at the so-called Cambridge Center for Alternative Finance, after the policy change in China, mining in Kazakhstan increased sixfold. It went from 8.2% in April to 18.1% in August. In the US it grew from 16.8% to 35.4% in the same period. And in Russia, the third market, it rose from 6.8% to 11%.

That same university center has recently published another study in which it reveals the high rates of pollution associated with cryptocurrency mining. According to that report, almost a year ago, if Bitcoin were a country, it would consume more electricity per year than Argentina. The reason is that this task of creating and maintaining cryptocurrencies uses huge servers that are kept permanently operational, which implies a high energy consumption. According to these same researchers, bitcoin mining uses about 121.36 terawatt-hours (TWh) of electricity per year, a very high number.


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