Bitcoin computing power slumps amid Kazakhstan crackdown

The internet was on Wednesday shut down across the country in what monitoring site Netblocks called ‘a nation-scale internet blackout’

The global computing power of the bitcoin network has dropped sharply as the shutdown this week of Kazakhstan's internet as an uprising hit the country's fast-growing cryptocurrency mining industry.

Kazakhstan became last year the world's second-largest centre for bitcoin mining after the US, according to the Cambridge Centre for Alternative Finance, after major hub China clamped down on crypto mining activity.

The internet was on Wednesday shut down across the country in what monitoring site Netblocks called ‘a nation-scale internet blackout’.

The move would have likely prevented Kazakhstan-based miners from accessing the bitcoin network.

Bitcoin and other cryptocurrenices are created or ‘mined’ by high-powered computers, usually at data centres in different parts of the world, which compete to solve complex mathematical puzzles in a highly energy-intensive process.

In August last year, the most recent data available, Kazakhstan accounted for 18% of the global hashrate.

In April, before China's latest clampdown on bitcoin mining, the figure was just 8%.

The hashrate at major crypto mining pools including AntPool and F2Pool was on Thursday at 1215 GMT down around 14% from its level late on Tuesday, according to data from mining firm BTC.com.

Yet a drop in hashrate isn't necessarily supportive for the price of bitcoin.

Bitcoin dropped below $43,000 on Thursday, testing multi-month lows after investor appetite for riskier assets fell as the U.S. Federal Reserve leant toward more aggressive policy action.

The more miners on the network, the greater the amount of computer power is needed to mine new bitcoin. The hashrate falls if miners drop off the network, in theory making it easier for the remaining miners to produce new coin.