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Bitcoin price: Massive blow for crypto as Kazakhstan internet shuts down

The world’s second-largest bitcoin mining hub been shut down after massive unrest gripped the central Asian country of Kazakhstan.

A fifth of the world’s bitcoin mining has been knocked out as massive unrest grips Kazakhstan.

The central Asian country accounts for about 18 per cent of the world’s bitcoin mining operations, the bulk of which was shut down after extremely violent protests erupted in the former Soviet nation.

The creation of bitcoin, known as mining, is incredibly energy intensive and is impossible without the internet.

Violent protests across Kazakhstan were triggered by surging fuel prices and turned into more general protests against the government.

President Kassym-Jomart Tokayev ordered the nation’s telecom provider to stop internet service on Wednesday, according to CNBC. That led to immediate internet “blackout”.

The global hashrate, measuring how many miners are involved in managing the network, fell by 14 per cent from Tuesday to Thursday, according to data from mining service

The price of bitcoin has since dropped to its lowest level since September.

The cryptocurrency has slid more than 10 per cent since the start of the year. It was worth $41,553 ($A57,880) at 10am Saturday AEDT, according to CoinMarketCap.

It’s a huge fall from an all-time high of nearly US$69,000 (A$96,000) in November.

Kazakhstan became the world’s second largest centre for bitcoin mining last year. The United States is number one.

China was once the global powerhouse of bitcoin mining but the country banned it last year.

That caused bitcoin mining to relocate to Kazakhstan, in search of cheap energy.

Bitcoin mining is estimated to use 91 terawatt-hours of electricity per year, analysis from The New York Times shows. That’s more than what is used by Finland, a nation of about 5.5 million people.

The European country of Kosovo banned bitcoin mining this week because of the large amounts of energy the process needs is crippling the electricity grid and contributing to blackouts.

The government of the Balkan state of Kosovo has said security services will find those who continue to mine cryptocurrency and prosecute them.

Kazakhstan slides into chaos

Kazakhstan’s president on Friday rejected calls for talks with protesters after days of unprecedented unrest, vowing to destroy “armed bandits” and authorising his forces to shoot to kill without warning.

In a hardline address to the nation, Kassym-Jomart Tokayev also gave “special thanks” to Russian President Vladimir Putin after a Moscow-led military alliance sent troops to Kazakhstan to help quell the unrest.

Security forces had blocked off strategic areas of Almaty — the country’s largest city and epicentre of the recent violence — and were firing into the air if anyone approached, an AFP correspondent said.

Elsewhere the city was like a ghost town, with banks, supermarkets and restaurants closed. The few small shops still open were fast running out of food.

Mr Tokayev said order had mostly been restored across the country, after protests this week over fuel prices escalated into widespread violence.

“Terrorists continue to damage property… and use weapons against civilians. I have given the order to law enforcement to shoot to kill without warning,” Mr Tokayev said in his third televised address this week.

He ridiculed calls from abroad for negotiations as “nonsense”.

“We are dealing with armed and trained bandits, both local and foreign. With bandits and terrorists. So they must be destroyed. This will be done shortly.”

Airport closed

Long seen as one of the most stable of the ex-Soviet republics of Central Asia, energy-rich Kazakhstan is facing its biggest crisis in decades.

The violence erupted late Tuesday, when police fired tear gas and stun grenades at a thousands-strong protest in Almaty.

The next day protesters stormed government buildings including the city administration headquarters and presidential residence, setting them ablaze.

The interior ministry said 26 “armed criminals” had been killed in the unrest. It said 18 security officers had been killed and more than 740 wounded, and more than 3,800 people detained.

The numbers could not be independently verified and there was no official information about casualties among civilian bystanders.

The full picture of the chaos has often been unclear, with widespread disruptions to communications including mobile phone signals and hours-long internet shutdowns.

Most flights into the country have been cancelled, and Russian news agencies quoted Almaty airport officials saying it would be closed to all but military flights until Sunday.

Western countries have called for restraint on all sides and respect for people’s right to protest peacefully.

China’s President Xi Jinping however praised Tokayev for taking “strong measures”.

– with AFP

Originally published as Massive blow to Bitcoin as Kazakhstan slides into chaos

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