The violence left many people dead and disrupted internet and power services across the country. As a result of this political tussle, Bitcoin mining also took a hit, with the total hash rate falling back more than 13% during this ordeal. Bitcoin itself fell more than 15% during this time. Both of these factors resulted in major publicly trading Bitcoin mining companies’ stocks posting heavy losses.
Kazakhstan’s political meltdown was sudden and impacted several key sectors of the world economy, including the crypto sector. The turmoil-ridden country faced huge protests and riots over a big increase in energy prices and as a result, more than 150 people died including law enforcement officials. Eventually, international forces led by Russia were asked for and they helped in returning some sort of normalcy in the area.
The turmoil meant that there were some question marks around the bitcoin mining industry’s sustainability, especially in less secure areas like Kazakhstan. The country with just a population of just 19 million people contributed around 18% of the total hash rate to the Bitcoin network which is a considerable figure. But, the increased dependency on the country’s security situation meant that the aftermath of a communications breakdown would be severe as well.
Almost identically, some of the top publicly traded Bitcoin mining companies posted similar drop in relatives price indices. Here are three belonging to Bitfarms, Hut8 Mining Corp and Marathon Digital Holdings:
As you can see, it can be easily seen that last week’s public unrest in Kazakhstan immediately impact the Bitcoin mining companies’ stocks directly and in an almost direct manner. Even the aftermath of the disaster appears to be heading in the same direction and all of them are posting some recoveries.
While Bitcoin mining companies’ profits increase considerably from low electricity rates in countries like Kazakhstan, the added uncertainty means that there is no assurance their systems will remain free from risk. While in this case, the situation was controlled from getting worse, it could have gotten a lot worse and these companies would have had faced further on-ground losses. But for now at least, the companies didn’t face too many problems in getting back on track.
However, the stocks have taken a big jolt and will take some time in their respective recoveries. An uptick in BTC price index can go a long way in making that happen but the market is overall bearish right now.
Image Source: pixabay.com
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