Tom Wilson

LONDON, (Reuters) – The world’s computing power has fallen sharply following the sudden shutdown of Kazakhstan’s internet this week during a violent uprising that ravaged the nation’s rapidly-growing cryptocurrency mining sector.

The Cambridge Centre for Alternative Finance said that Kazakhstan is now the second largest center for Bitcoin mining in the world, behind the United States. This was after China, a major hub, stepped down from crypto mining.

Russia sent paratroopers to Kazakhstan Thursday, in order to quell the nationwide rebellion that broke out after the violence spread throughout the former Soviet country. According to police, they have killed several rioters from Almaty while the state TV reports that thirteen members of security forces were also dead.

On Wednesday, the internet went down in all of the nation as a result of what Netblocks monitored called a “nation-scale internet blackout”.

It would likely have stopped miners in Kazakhstan being able to access the bitcoin network.

Other cryptocurrenices can be created by powerful computers at different data centres around the world. They compete with each other to solve complicated mathematical puzzles.

The most recent information available shows that Kazakhstan represented 18% in the global “hashrate”, which is the crypto-lingo used to describe the computer power of computers connected to the Bitcoin network.

This was just 8.8% as of April 2017, before China’s recent clampdown against bitcoin mining.

According to BTC.com data, the hashrate of major crypto mining pool – groups made up of different miners from various locations who work together to create bitcoin – was at 1415 GMT on Thursday. It was down about 14% from Tuesday’s level. Reuters requested comment from both pools.

CRACKDOWN ON CRYPTO MINING

A drop in bitcoin’s hashrate won’t be supportive of its price.

Bitcoin plunged below $43,000 on Thursday as investors became less inclined to invest in riskier assets. The U.S. Federal Reserve took more aggressive policies and the investor appetite fell.

To mine bitcoin new, there are always more miners. If miners leave the network, the hashrate drops. This should make it possible for remaining miners produce new coins more efficiently.

Kazakhstan’s crypto mining operations are most powered by older coal plants. This, together with entire cities built around coal mines, is a problem for authorities who are trying to decarbonize the economy.

According to the Kazakh government, it had announced last year that it was going to first crack down on illegal “grey,” or unregistered, miners. These people are believed by it might use twice as much energy as officially registered “white” ones.

The energy ministry stated that “grey mining” may have consumed up to 1.25 GWt last year, which combined with 600 MWt from “white” miners makes Kazakhstan about 8.8% in total generation capacity.

Protests against the New Year’s Day fuel price rise in the West started the nation’s revolt.