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The unrest in Kazakhstan has brought to the forefront some novel challenges that may impact the cryptocurrency industry, particularly proof of work miners. Specifically, the recent protests and related unrest in Kazakhstan has reportedly resulted in widespread internet outages, which may impact Kazakhstan’s burgeoning Bitcoin mining industry.

As some may recall, after China banned cryptocurrency mining, many miners fled abroad, including to Kazakhstan due to lower-cost energy sources. However, as Kazakhstan grapples with protests, as well as energy shortages and serious internet outages, Bitcoin and other proof of work miners may be forced to reconsider their locations (though some have already left Kazakhstan due to unreliable electricity).


Nations that have reliable internet and energy access may become bastions for proof of work miners in the future, notwithstanding higher energy cost considerations. Will this have an impact on the Bitcoin network and prices? We have seen crypto projects engaging in “regulatory arbitrage” (e.g., moving projects to jurisdictions deemed to be more friendly from a regulatory perspective), will we see “stability arbitrage” as well? Anecdotally, we have seen increased interest in mining operators establishing operations in the U.S., for example. Alas, add foreign policy considerations to the pool of other challenges impacting crypto.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


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Andrew Jacobson | Associate

A former enforcement attorney at the New York State Department of Financial Services (DFS), Andrew Jacobson represents individual and institutional clients at Seward & Kissel in connection with complex governmental investigations, regulatory probes, and related civil matters. While at the DFS, Andrew was involved in early cryptocurrency issues and brought some of the most significant enforcement actions for violations of U.S. economic sanctions and anti-money laundering laws.

Andrew has extensive experience advising on matters relating to U.S. economic sanctions, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), and anti-money laundering laws. Andrew serves as Chair of the Export Controls, Sanctions, and Anti-Corruption Subcommittee of the International Bar Association, co-chair of the Virtual Commodity Association’s BSA/AML Committee, and is a member of the Digital Chamber of Commerce’s AML Task Force.

As a member of Seward & Kissel’s Blockchain and Cryptocurrency Group, Andrew regularly advises clients on all aspects of financial crimes compliance and licensing in the virtual asset industry, including:

  • OFAC and FinCEN regulatory requirements, including asset blocking and reporting obligations;

  • Unhosted wallets and risks to software providers and VASPs;

  • Privacy coins, mixers, and other external privacy mechanisms;

  • Technology and open-source user platforms;

  • Ransomware and other cyberattack-related ransom payments;

  • BitLicense and state licensing requirements; and

  • Counterparty due diligence and screening.


“This is certainly a lesson to senior management to take compliance seriously and that there are consequences for individuals who don’t follow the regulatory regime.”

Andrew’s thoughts on BitMEX indictment, as published in Law360 article “BitMEX Case Seen as Blessing in Disguise for Crypto Sector”