Oil, Bitcoin Mining, and Uranium: Why Russia’s Kazakhstan Intervention Matters

Russia and its military allies Wednesday sent troops to Kazakhstan to help the country’s government suppress protests that have resulted in dozens of casualties among the demonstrators since the beginning of the week.

The intervention—the first since the military alliance’s creation 20 years ago—will add to current market concerns and has had an immediate impact on uranium prices. And it could trigger a reevaluation by global investors of the country’s reputation as a safe and stable destination for Western capital.

Kazakhstan is a major oil producer, with output currently at about 1.6 billion barrels a day, but the country’s three major oil operations seemed to be working Thursday. Tengizchevroil, a Chevron-led consortium operating the country’s highest-producing oil field in Tengiz, said that operations had not been “impacted” by the fact that workers had gathered in support of the demonstrations.

Kazakhstan had also become in recent months a favored destination of Bitcoin miners who chose to leave China after Beijing’s recent crackdown on crypto assets. According to Cambridge University, it is only second to the U.S. for the amount of energy dedicated to crypto mining. The shutdown of the internet on government orders means that operations will have to cease for now, contributing to the fall in Bitcoin prices Thursday.

The situation has also triggered a steep rise in the price of uranium, of which Kazakhstan is the world’s leading producer. Uranium jumped 8.5% on Wednesday, according to data quoted by Bloomberg. Shares in Cameco (ticker: CCJ), a Canada-based major uranium producer, were down 4.7% Thursday in New York.

The unrest started earlier this week after a reform removed caps for car fuel prices. It has since turned into a widespread protest against the 30-year authoritarian regime of Nursultan Nazarbayev, the 81-year old Kazakhstan strongman and former president. The situation is creating a new headache for the Kremlin, which has already massed around 100,000 troops at the Ukrainian border.

Tass, the Russian government-owned news agency, said that the Collective Security Treaty Organization—a military alliance of former Soviet republics led by Russia—had decided to send “peacekeeping forces…for a limited period with the aim of stabilization and normalization of the situation” in Kazakhstan.

Kazakhstan President Kassym-Jomart Tokayev has ordered a national state of emergency, banks have been closed, and the internet is down in most of the country, journalists on the ground have reported.

Another post-Soviet state, Belarus, was the theater of major demonstrations last year after opponents of leader Alexander Lukashenko took to the streets to protest against what international observers agree was a rigged presidential election. Russian President Vladimir Putin then signaled his strong backing for his ally, and Western governments have refused to recognize Lukashenko as the country’s president.