The internet shut down in the world's second-biggest mining hub, in yet another blow to miners searching for a permanent and stable home.
Many of China's cryptocurrencies miners sought refuge in neighboring Kazakhstan after China banned all of them. The country has seen unrest in the past, but this is the worst it has seen in decades.
The president of the country ordered the telecom provider to shut down internet service after he sacked his government. According to Kevin Zhang of digital currency company Foundry, the shutdown took 15% of the world's miners offline, which helped bring over $400 million of mining equipment into North America.
Didar Bekbau said, "No internet, so no mining."
It was the first time since September that the virtual currency fell below $43,000.
Law enforcement officers block a street in a protest against fuel price increases.
The entire episode lays bare two important facts about the state of the mining industry. Even when a large portion of miners are taken offline, the network is still resilient. Second, the U.S. may soon see a fresh influx of miners.
The question is whether the U.S. has the room to take in more miners.
It is concerning that previous congestion and bottlenecks around hosting capacity will be squeezed that much tighter.
He said there was a lot of demand for hosting capacity.
When Beijing kicked out all of its miners, it seemed like a logical place to go. The country is a major energy producer, even though it was next door.
The low-margin mining industry in countries such as Kazakhstan is attractive to miners because of the cheap and abundant supply of energy.
It's good for miners who need to build physical installations in a short period of time because the government in the country has a more laissez faire attitude about building.
Bekbau runs a company that provides hosting services to international miners and sells specialized equipment needed for mining.
According to the Cambridge Centre for Alternative Finance, the United States has a larger share of the global mining market for tHe digital currency.
The government has not been very happy about the industry.
New rules to discourage mining have been set down by the lawmakers of the country. The move is expected to change the incentives for people to deploy capital.
Nic Carter, co-founder of Castle Island Ventures, said that the internet outage came at the heels of efforts to impose a defacto ban on new mining in the country.
Carter said that the bans underscore why miners are locating themselves in politically stable jurisdictions.
Several mining experts tell CNBC that they think that the country was always intended to be a temporary stop on the way west.
Large miners are going to Kazakhstan in the short-term with older equipment, according to Alex Brammer of Luxor Mining.
As older-generation machines reach the end of their service lives, those companies will likely deploy new machines into more stable and energy efficient and renewable jurisdictions.
The U.S. is home to some of the cheapest sources of energy on the planet, which makes it an ideal location for mining criptomining.
It could bode well for the larger debate about the carbon footprint of the digital currency if miners make their way west.
Carter points out that the Chinese ban is related to the fact that the energy in the Central Asian country is carbon intensive.
Some people are not convinced of an imminent exodus from the country.
The majority of the membership of the National Association of Blockchain and Data Centers Industry in the country is comprised of mining companies. Dorjiyev told CNBC that after speaking to owners of mining farms across the country, it was his understanding that most data centers are safe because they are located in regions where there are no protests.
Bekbau is still optimistic, and he hopes by next week everything will be okay.
Industry experts tell CNBC that the biggest lesson from this whole experience is that the mining of the digital currency has survived another stress test with little drama.
Brandon Arvanaghi, who runs a company that enables corporate treasury participation in criptocurrency markets, said that when a country shows it is unstable for mining criptocurrency, miners will move elsewhere.
Over time, the network gets more resilient. Disruptions are less and less frequent when miners migrate towards the most favorable jurisdiction.
