Kazakhstan\`s bitcoin \`paradise\` may be losing its lustre

Kazakhstan may no longer be the bitcoin sanctuary it once was_ according to some big miners who are looking to leave the global crypto hub following internet shutdowns last week that compounded fears about tightening regulation.

The government web shutdowns during an explosion of unrest in the country_ the world's second-largest centre for mining_ caused bitcoin's global computing power to drop around 13% as data centres used to produce the cryptocurrency were knocked offline.

Alan Dorjiyev of the National Association of Blockchain and Data Center Industry in Kazakhstan_ which represents 80% of legal mining companies in the country_ said most crypto producers were now back online.

Yet the resumption of operations may belie problems to come for the fast-growing cryptocurrency industry_ according to four major miners_ with some saying they or their clients may look for other countries to operate in.

The internet outage compounded growing concerns about the stability and prospects of the business as tighter government oversight looms_ the miners said.

Vincent Liu_ a miner who moved operations to Kazakhstan from China to take advantage of the country's cheap power_ said the changing environment had led him to look at shifting operations to North America or Russia.

"Two or three years earlier_ we called Kazakhstan a paradise of the mining industry because of the stable political environment and stable electricity_" said Liu.

"We are evaluating the situation ... I suppose we will keep a part of hashrate in Kazakhstan and will move some to other countries_" he said.

Bitcoin and other cryptocurrencies are "mined" by powerful computers that compete against others hooked up to a global network to solve complex mathematical puzzles. The process guzzles electricity and is often powered by fossil fuels.

Kazakhstan became the world's No.2 centre for bitcoin mining after the United States last year_ attracting an influx of miners and data centre bookings from former global leader China after a crackdown on the industry by Beijing.

In August_ Kazakhstan accounted for 18% of the global "hashrate" - crypto jargon for the amount of computing power being used by computers connected to the bitcoin network. That was up from 8% in April_ before Chinese miners shifted machines and bought capacity at Kazakh data centres.