The government of the former Soviet Republic of Kazakhstan has declared a state of emergency in response to violent protests, riots and sieges of government buildings. This included temporarily shutting down the Internet on January 5. As an estimated 22% of the global hashrate is accounted for by Bitcoin miners from Kazakhstan, the hashrate dropped suddenly.

The reason for the drop in hashrate is that to mine Bitcoin, a few key ingredients must be in place: electricity, hardware for computing power, and continuous access to the internet. Without internet, miners lose access to the Bitcoin blockchain, which receives a new block roughly every ten minutes. According to Coinwarz, at its highest point on January 4, the hashrate was 194 exa hash (EH) per second. During the Internet blackout, it dropped to a low of 168 EH/s.

Gasoline is fueling protests

The protests were reportedly against corruption and the high costs of gasoline and living in general. Kazakhstan is one of the largest oil-producing countries. It is, therefore, no surprise that Bitcoin miners there do not run on windmills but largely on fossil fuels.

A faster recovery

The Bitcoin network experiences sudden drops in hashrate more often. When China imposed a ban on mining in the spring of 2021, the hashrate dropped by about 50% in a short time. It took months for it to return to pre-ban levels. After the current dip, the hashrate recovered much faster, presumably because miners in Kazakhstan have regained access to the Internet.

A much-suggested solution to avoid downtime of miners in this kind of situations, is for them to install satellite internet as a backup.