Ethiopia is gradually becoming a Bitcoin mining center, thanks to its vast hydropower facilities and low electricity prices. Local miners currently consume approximately 600 megawatts (MW) of power, with more capacity expected to become available soon. With this increase in activity, Ethiopia has become one of Africa’s top cryptocurrency mining destinations.
A strategic move
The Ethiopian government has taken deliberate steps to… environment conducive to Bitcoin mining. In recent months it has struck deals to improve its digital infrastructure, including a $250 million partnership with West Data Group to create data mining and artificial intelligence capabilities.
This falls within Ethiopia’s broader strategy to embrace technology for better economic growth, especially after China’s recent ban on cryptocurrency mining, which forced many miners to look elsewhere to continue their operations.
We participated in the second @GAMA_alliance conference in Addis Ababa, Ethiopia.
Ethiopia leads Africa in hashrate deployed at 600 MW, with much more hashrate to follow.
Luxor looks forward to continuing to support miners in Africa with machine imports and custom firmware pic.twitter.com/lHKcwxSpSL
— Luxor Technology 🟧⛏️ (@luxor) October 7, 2024
Ethan Vera, co-founder of Luxor Mining, said that because electricity costs about 3.14 cents per kilowatt hour, the country is an attractive destination for miners using mid-generation hardware such as Bitmain’s S19J Pro.
These devices are not only cheap but also consume fewer watts of electricity, which is also a crucial factor in view of the current energy scenario of the country. Ethiopia’s cold climate has also reduced the need for expensive cooling equipment in mining operations.
Economic potential
This fast-growing industry has far-reaching economic consequences. Analysts predict that Bitcoin mining could bring in about $2 billion to $4 billion to the economy. However, it is important to emphasize that approximately half of the country’s population still does not have access to power.
This raises questions about how the government will balance the needs of miners and citizens. The Ethiopian government has shown enthusiasm towards Bitcoin mining as a revenue source, but there is an issue of regulatory stability.
Federal Democratic Republic of Ethiopia. Image: African Development Bank Group
The government is currently creating legislation to provide a clearer framework for Bitcoin operations, which could help alleviate some of the issues miners face. However, as has been shown in other regions, regulatory changes can occur quickly and unexpectedly.
Challenges ahead
There are positive indications regarding Bitcoin mining in the country, but problems still remain. The country’s regulatory framework is still developing and various threats of government action are causing fear among many miners. According to industry experts, the current situation may seem attractive, but no one knows if Ethiopia will continue to encourage Bitcoin mining in the long run.
Moreover, because the government expects to attract international investment through these efforts, it must provide all the energy its citizens need. However, as Ethiopia continues to improve its infrastructure and strengthen capabilities, especially through projects like the Grand Ethiopian Renaissance Dam, it must maintain a balance that will benefit both miners and citizens.
Featured image from Pexels, chart from TradingView