Thursday, January 06, 2022

No Bitcoin did not bring down the Kazakhstani government

I'm still greeting with silence from all my friends in Kazakhstan in response to my messages. The internet blackout seems to still be in place.

But in my attempts to scour the internet for scraps of news about KZ, I have found my favorite really dumb take on the KZ crisis: the theory that it was caused by bitcoin. Apparently 18% of all bitcoin mining in the globe took place in Kazakhstan (apparently Chinese miners moved their operations to KZ when China cracked down on cryptocurrency). When the government shut down the internet in Kazakhstan this week, there was a noticeable drop in bitcoin production.

A few people in the bitcoin community noticed (at least that's what it looks like from their tweets). Because their lives revolve around Bitcoin and because they heard scraps of actual information about the protests in KZ, i.e. that the protests started because of rising energy costs. That caused them to jumped to the conclusion that the higher energy costs were caused by all that energy-hogging bitcoin mining. That's not true. The high energy costs were about liquified natural gas (which not, for the most part, used at all to produce electricity that powers computers) and the costs were about the end to a government subsidy of LNG. In other words, the increased costs that sparked the initial demonstrations have no relation to bitcoin mining at all.