The increase in energy prices for the population has led to mass rallies and riots in Kazakhstan. To reduce the degree of social tension on January 5, Kazakhtelecom (KZ:KZTK has restricted access to the Internet, which is why the number of connections by the middle of the day fell to 2%.
The lack of a stable Internet connection hit the miners:
the power of the Bitcoin network in a few hours decreased by 13.4% to 177 hash/s.
Kazakhstan took the second place in Bitcoin mining last year after Chinese regulators banned any operations with cryptocurrencies and recognized coin mining as an undesirable activity. The lion’s share of installations relocated to Kazakhstan due to the proximity of the location, low cost of electricity and loyal attitude to mining.
In addition to the temporary shutdown of the second largest player in the mining market, the value of Bitcoin continues to be negatively affected by the Fed’s decision to tighten monetary policy soon. On January 05, the minutes of the last meeting were published, which confirmed the expected three-fold increase in key rates, as well as a possible reduction in the regulator’s balance sheet. The implementation of these measures can limit the growth of inflation and cause the dollar to strengthen in the long term.
However, the head of Galaxy Digital Mike Novogratz believes that the area of $38-42 thousand is a key support for Bitcoin: institutional investors have been waiting for a correction since November last year and are ready to step up purchases of cryptocurrencies. This is also evidenced by the fear and greed index, which dropped to the summer lows of 2021.
The Internet outage in Kazakhstan is most likely temporary, and the situation will normalize in the near future. As for the Fed, at this stage, inflation is ahead of both forecasts and target levels of the regulator. And this is already a reason to buy Bitcoin, which many analytical agencies recognize as insurance against price increases in the preferences of large investors.
