Violent protests have poured into the capital of Kazakhstan in an outraged response to sharp fuel rate hikes. For citizens of the central Asian country, the government has resigned and a state of emergency has been declared in the nation’s capital. But for the rest of the world, the turmoil has taken a chunk out of Bitcoin’s hash rate, prompting fears of another “hash crash.”
Kazakhstan Internet Blackout Has Big Impact On Hash Rate
Back some six months ago, China began banning Bitcoin mining in the region once known to account for almost two-thirds of the blockchain network’s hash rate.
Hash rate is the measure of computational power miners are producing en masse. When a substantial portion of its power is removed, hash rate plummets and price tends to follow.
Related Reading | 2022: The Year The Secular Bitcoin Bull Run Could End
And that’s what is happening once again due to a massive internet blackout, potentially put in place by the nation’s government to limit the coverage protests are currently receiving. Protests have spilled into Kazakhstan’s capital. Several government facilities and even the President’s home have reportedly been set ablaze.
The unrest is due to the government’s removal of fuel price control policies, which caused gas prices to increase two-fold since the start of the year.
The Bitcoin hash rate has taken a big hit in 24 hours | Source: Glassnode
Will Bitcoin Price Follow And Free Fall Along With The Network?
While the focus on the price of gas and the resulting protests are rightfully the focus of Kazakhstan, cryptocurrency investors might be particularly interested in the situation as well, due to Kazakhstan’s large share of the Bitcoin hash rate.
The country currently accounts for around 18% of the network’s hash rate, which has recently reached new all-time highs. The Bitcoin hash rate started 2021 setting new all-time highs and price followed. When the hash rate collapsed due to the China ban, price again followed. What will happen next with a major outage in Kazakhstan already underway?
The good news and the bad news in one chart | Source: BTCUSD on TradingView.com
Given the size of China’s contributions to the hash rate versus Kazakhstan, it is clear that the network itself will recover.
Related Reading | Bitcoin Falls Flat: Examining A Rare Bull Market Corrective Pattern
But Bitcoin price is currently grinding along support that’s been repeatedly tested for nearly a month straight, during some of the most negative sentiment the cryptocurrency market has seen since Black Thursday in 2020.
Could the situation in Kazakhstan simply be the start of the dominoes starting to fall once again for Bitcoin?
Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com
Discussion about this post