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.