Bit Mining Plunges 33% Amid Kazakhstan Turmoil

Time:2022-01-18 Source: 705 views Trending Copy share

What happened

Today, crypto-miner Bit Mining (NYSE:BTCM) lost approximately one-third of its market capitalization, nosediving 33% as of 1:30 p.m. ET. This move was the largest among major Bitcoin miners, suggesting there's something going on underneath the surface.

Bit Mining is among the largest Bitcoin miners that shifted operations from China to Kazakhstan, following the Chinese ban on cryptocurrency mining. This move, initially viewed as strategically sound, is now being questioned by investors in a big way.

Over the past couple of weeks, peaceful protests in Kazakhstan over a surge in oil prices turned violent. Reports of deaths, looting, and photos of vandalized property went mainstream.

However, a number of measures imposed by the Kazakh government to stem the protests included major internet blackouts, aimed at the media and protestors, but unintentionally (or perhaps intentionally) hitting crypto miners, as well.

Today, reports suggest that Bit Mining is "unlikely" to leave Kazakstan for another, more favorable geopolitical area. Accordingly, today investors appear to be pricing in higher risk for this crypto-mining operation, relative to its peers.

So what
It may be understandable for corporate executives from Bit Mining to loathe another move. After all, shifting an entire business to another country is no small ordeal. Additionally, recent reports suggest that internet stability and crypto-mining activities could see some normality next week.

However, for investors in Bit Mining who have already experienced significant disruption as a result of these protests, the fact that the company has decided not to move is a big deal. For one thing, there's the risk the government will enforce strict curbs on crypto miners, due to the impact this sector has on Kazakhstan's power grid. Many attribute the higher energy prices that were placed on Kazakh citizens to crypto miners.

Additionally, the threat of looting or theft from Bit Mining is amplified in this environment. Thus, investors looking at the macro geopolitical picture appear to be gravitating toward U.S. and Canada-based Bitcoin miners right now.

What now
It should be noted that risk assets have tumbled today, including the price of Bitcoin and other large tokens. Accordingly, most crypto miners are seeing significant declines at the time of writing.

However, a company that loses one-third of its value in a given day represents a significant unraveling of investor interest. Right now, Bit Mining looks like the crypto miner that no one wants to touch.

Whether this will ultimately prove to be an incredible buying opportunity remains to be seen. However, it appears this crypto miner has to have many things go perfectly for a near-term rebound to take hold.

Chris MacDonald

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