By Sharan Kaur Phillora
Ethiopia is attracting attention from Chinese Bitcoin miners due to its low electricity costs, made possible by the Grand Ethiopian Renaissance Dam, Africa’s largest hydroelectric project. Last spring, signs of this new development emerged as cargo containers filled with high-powered computers were spotted near electricity substations linked to the dam.
Here’s what we know:
This move marks a significant shift for Chinese miners who have been searching for affordable power and favorable regulatory environments since their expulsion from China two years ago.
The allure of Ethiopia for these miners is multifaceted. Not only does the country offer some of the lowest electricity prices globally, but it has also shown an openness to Bitcoin mining since 2022, despite its ban on cryptocurrency trading. The growing partnership between China and Ethiopia, accentuated by Chinese companies’ involvement in constructing the $4.8 billion dam, has paved the way for this burgeoning sector.
However, this venture is not without its risks. Past instances in countries like Kazakhstan and Iran have shown that initial support for Bitcoin mining can quickly turn into opposition if the industry’s energy consumption begins to threaten the domestic electricity supply and stir public unrest. Moreover, nearly half of Ethiopia’s population remains without access to electricity, making the topic of Bitcoin mining particularly sensitive.
Despite these challenges, Ethiopia’s potential as a mining hub is significant, with the state power monopoly already striking deals with 21 Bitcoin miners, the majority of whom are Chinese. This surge in interest is underscored by the arrival of substantial shipments of mining equipment to Ethiopia, signaling the country’s rising prominence in the global Bitcoin mining landscape.
The decision to welcome Bitcoin mining aligns with Ethiopia’s need for foreign exchange earnings, offering a lucrative opportunity for both the country and the miners. Nonetheless, the long-term sustainability and impact of this venture remain to be seen, especially given the volatile nature of the cryptocurrency market and the political and economic dynamics at play.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
