Following the news of national events in Kazakhstan provoking an Internet failure in the Bitcoin mining country which resulted in a significant drop in the hash rate, CryptoSlate spoke with Alan Konevsky, legal director of PrimeBlock.
PrimeBlock is a digital asset mining and infrastructure provider, which currently operates a hash capacity of around 1000 PH / s, which equates to around 0.6% of Bitcoin’s total global hash rate, with mining facilities spread across the United States and Canada.
Konevsky commented on recent developments in Kazakhstan and Kosovo and highlighted their impact on the industry, from an insider perspective.
Developing countries struggle to keep up
Crypto mining aside, developing countries like Kazakhstan and Kosovo have limited power grids, unable to meet high demand.
“Electricity generation and distribution infrastructure is often a weak point,” Konevsky said, pointing to the bottleneck for developing countries struggling to keep up with technological advancements.
“Political instability fuels and stems from such struggles and has exacerbated their impact and duration,” he explained.
At the end of last year, Central Asia – from western Kazakhstan to southern Tajikistan –suffered power and energy shortages after being hit by a severe drought, limiting hydropower production and hence Bitcoin mining.
In November, the Kazakhstan Electricity Grid Operating Company (KEGOC) explained that the problems were due to malfunctions, but also overuse of the system, which the government attributed to crypto miners who flocked in Kazakhstan from China.
“In a similar fashion, Kosovo’s largest coal-fired power plant was recently closed for a technical problem, so they were forced to import electricity, the prices of which are already on an upward trend. “Konevsky commented.
Faced with the worst energy crisis in a decade due to production shutdowns, the Kosovo government recently Posted a general ban on mining cryptocurrencies with the aim of reducing electricity consumption.
“In the grand scheme of things, the decisions of these countries to limit mining do not reflect their feelings on blockchain and cryptocurrencies so much as their status as developing countries with developing infrastructure,” noted Konevsky, adding that “it is quite difficult for them to meet basic needs and support economic growth.
What does this mean for North American miners?
Bitcoin miners in North America are indirectly affected by these decisions in a number of ways, some of which are quite positive, according to Konevsky.
“First, less hashing power in the network means more room for miners in North America to increase their share of the network,” he began to explain.
“Second, mining companies, including those that moved after regulatory changes in China, have moved to countries like Kazakhstan and Kosovo because the cost of electricity is much cheaper than in North America. . If mining becomes a complete no-start in these countries, we could see the miners relocate instead of shutting down operations, thus reversing the loss of hashing power, ”he added.
“Third, the decisions made by these countries could set a precedent for other countries to follow. If other developing countries decide to limit or ban bitcoin mining, it could change the bitcoin mining landscape as a whole, ”Konevsky concluded.
The future of competition
“This industry is mobile, to a point,” Konevsky noted, commenting that as the Bitcoin mining industry matures, a stable political climate and stable inputs will play a decisive role.
Like other developing industries, “as companies seek to evolve in the face of barriers to equipment and energy supply and grapple with fluctuations in asset prices and other market challenges,” horizontal and vertical consolidation is to be expected.
As he explained, “The IPO is a great way for crypto firms to raise funds, gain more legitimacy, and even access new markets through increased financial firepower. “.
“Large mining companies have the resources and the size to weather the ups and downs of the market,” Konevsky explained, because of their ability to afford new equipment when prices are high and to rent or buy new equipment. space in data centers.
“Small miners, on the other hand, may not be able to survive if the price of Bitcoin drops too low or if they cannot compete with the large mining companies,” he noted, adding that long term – will always be competition between miners.
Although he could not disclose specific details on the company’s plans for 2022, Konevsky assured that PrimeBlock is well positioned to face the challenges of the market.
The company’s strategy is to focus on locations that have surplus electricity and favorable space, cost and regulatory parameters, he explained.
“We have the latest mining equipment, the best partnerships, a scalable and agile strategy that does not rely on long-term development projects, and a team of experienced professionals,” he concluded, adding that PrimeBlock is fine. equipped to meet the challenges of a developing country landscape.
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