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How Protests in Kazakhstan Caused the Price of Bitcoin to Tumble

Kazakhstan is experiencing one of the worst political uprisings in recent memory, and that has had a huge impact on the price of BTC. To understand why this is happening, it is crucial to understand what role Kazakhstan plays in the BTC network, and how that affects BTC price.

The Protests

The protests were sparked off by the government’s decision to raise the price of LPG. Due to the high cost of other fuel sources, most cars in the country had been converted to use LPG. As a result, when the price cap on LPG was lifted, it cause the cost of living to go up substantially.

 The Internet Shutdown

As protests got increasingly violent and far-reaching, the government decided to limit access to the internet. This was done to ensure that protesters were not able to effectively organize and protest. The shutdown was widespread across the entire country. When it happened, it also inadvertently affected many industries that rely on the internet. One of the worst-hit sectors was Bitcoin mining, which relies wholly on a fast and reliable internet connection.

Why BTC Prices Fell

Supply and demand forces are some of the most important factors that determine BTC price. Another indicator that buyers check is the hashrate. When the hashrate is higher, it means that more miners are working to support the BTC network. When the hash rate goes down, it also means that the difficulty of mining BTC goes down. The result is that those using less efficient mining rigs can mine more BTC.

Hashrate dropping in itself should not affect the price of BTC. However, it is important to note that Kazakhstan accounts for nearly 18% of the BTC hashrate. It rose to this level after China began a crackdown on BTC mining in the country. Being such a significant contributor to the BTC hash rate also means that many Kazakhstanis are active in the BTC market. When the internet was shut down combined with the shutdown of old coal mines, it means that most of them are unable to participate in the BTC market. The result is that demand goes down, which caused the price to go down.

Other Factors Affecting BTC Price

The internet shutdown combined with recent actions by the US federal reserve has all come together to deal a major blow to the price of BTC. Minutes from the US Federal Reserve indicate that it would dial back its supportive measures, which will include reducing the number of bonds it holds. As a result, investors have been pulling back from high-risk assets, including crypto. Besides that, the US central bank indicated that it could raise interest rates sooner than expected.

Summary

With the BTC hashrate having fallen so dramatically, now would be a good time for those with older mining rigs to try their luck. Those old rigs will be profitable for now. However, that will not last for long. Miners from China and Kazakhstan are likely to relocate to other regions to avoid the clampdown by their respective governments.

Written by HackerVibes

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