Recently, F3 intelligence analysts shared an article on the implications across all business markets that stem from government, media, and tech company crackdowns on domestic dissent. This week’s events in Central Asia are currently highlighting such an event playing out across the global crypto marketplace.
Crypto markets continue to crash after a series of geopolitical chain reactions. Over the last two years, China has been subsequently banning crypto currencies and crypto currency mining, with a special emphasis on Bitcoin. China’s public statements highlighted the environmental impacts of mining and the use of crypto currencies for fraud and money laundering. However, many believe the real reason for China’s crypto policies is an attempt to crackdown on those trying to circumnavigate the nation’s social credit policies. As a result of China’s policies, there has been an exodus of crypto miners from China to other nations willing to except the tradeoff between increased energy consumption and the economic opportunity crypto technology brings.
So what do the protests in Kazakhstan have to do with the price of Bitcoin?
Kazakhstan was one of the countries to have welcomed the exiled crypto miners leaving China. Until a few days ago, Kazakhstan was accounting for almost 20% of all global Bitcoin mining. Just this week, most of the Kazakhstan mining operations came to a halt as recent unrest over fuel prices spread across the nation, with Kazakh protestors seizing government buildings and airports. In the wake of the chaos, there have been rolling blackouts on the nation’s power grid, consequently shutting down the nation’s internet access. With instability overtaking Kazakhstan, Bitcoin mining firms like Xive have begun to look to other nations to host their operations.
So why is the entire crypto market seeing red?
The market is relatively tied to the price of Bitcoin, with investments typically moving in sympathy with Bitcoin before trickling down to the rest of the market’s alternative coins, or altcoins. With roughly 20% of the Bitcoin mining being shut down in a matter of days, Bitcoin’s sudden price drop caused a chain reaction throughout the rest of the crypto market
So where do things go from here?
The worst-case scenario is that investors and crypto companies could see the start of a 2017-esque macro level bear market. This event comes right as some were expecting Bitcoin to rally and continue to push a bull market that many thought was just catching its second wind. If a bear market is upon crypto, it would have global implications for both investors and those who rely on cryptocurrency day-to-day. Many individuals throughout Africa and South Asia have adopted cryptocurrency on a mass scale as an alternative to the plague of extremely high fiat currency inflation rates and lack of access to banking.
The most likely scenario is that countries with cheaper energy will become a refuge for crypto miners and validators. In the world of globalization, companies can easily set up shop within a new country almost overnight. Nations with the proper balance of energy cost and stability will become the new “safe-haven” for the world’s crypto miners and validators. However, there will eventually be cheaper and more energy efficient DLT solutions in utility projects like Hedera Hashgraph. Hedera Hashgraph is currently 250,000 times more energy efficient than Bitcoin, and is the most environmentally friendly project in the world.