Chinese cryptocurrency mining companies are increasingly setting their sights on Ethiopia as Ethiopia’s cheap electricity is attracting mining companies. Despite the official ban on cryptocurrency trading in both China and Ethiopia, the latter legalized Bitcoin mining in 2022, attracting Chinese firms seeking alternatives after China’s 2021 crypto ban.
Ethiopia’s appeal lies in its abundant and inexpensive hydropower, providing 92% of the country’s electricity. The favourable climate for mining operations, coupled with lower cooling costs compared to locations like Texas, makes it an attractive prospect for Chinese miners.
Out of the 21 companies striking deals with Ethiopia’s power monopoly, a staggering 19 are Chinese. The pursuit of cost-effective electricity serves as a driving force behind these companies establishing operations within the African nation.
Ethiopia’s Low-Cost Electricity Beckons Chinese Bitcoin Miners Amid Risks
Ethiopia has become an unexpected haven as its cheap electricity is attracting mining companies. Chinese bitcoin miners, who found refuge after being ousted from China following a crypto ban. The lure of the East African nation lies in its rock-bottom electricity costs and a seemingly favourable government stance, presenting both economic opportunities and political risks.
Chinese Exodus to Ethiopia
Cargo containers housing energy-intensive computers appeared near Ethiopia’s Grand Ethiopian Renaissance Dam (GERD), marking the arrival of Chinese bitcoin miners seeking affordable power. Faced with political and economic challenges, they were drawn by Ethiopia’s competitive electricity rates and the government’s apparent openness.
China’s significant involvement in building the $4.8 billion GERD has strengthened ties between the two nations. Despite Ethiopia’s ban on cryptocurrency trading, the government legalized bitcoin mining in 2022, fostering a unique partnership between Chinese miners and Ethiopian authorities.
Special Appeal for Chinese Firms
Ethiopia stands out as an opportunity for all Bitcoin miners globally since its cheap electricity is attracting mining companies. It is particularly beneficial for Chinese companies facing challenges competing in Texas, the current global hub for mining. However, the move is not without risks, both for the companies and Ethiopia, given the history of developing nations reversing their stance on Bitcoin mining.
Political Sensitivities and Economic Potential
Ethiopian officials tread cautiously due to the controversial nature of Bitcoin mining. With almost half of the population lacking electricity access, mining has become a delicate topic. Yet, it represents a potential source of foreign currency earnings for the nation struggling with economic challenges.
Ethiopia’s Rise in Bitcoin Mining
According to estimates, Ethiopia has quickly become one of the top destinations for Bitcoin mining machines globally. The state power monopoly has struck deals with 21 bitcoin miners, with an overwhelming majority being Chinese companies.
Geopolitical Factors at Play
Chinese miners, confident in the geopolitical dynamics, are reportedly starting operations without waiting for official approval. Some disguise their activities as factories or agriculture ventures to secure electricity, showcasing the confidence of China’s significant investments in Ethiopia.
Climate Conditions and Ideal Temperatures
Apart from cheap and renewable power, Ethiopia’s ideal climate conditions, with temperatures ranging from 5 to 25 degrees Celsius, make it an attractive destination for mining operations. This unique blend of economic and environmental factors positions Ethiopia as a potential rival to Texas in global bitcoin mining capacity.
As Chinese Bitcoin miners find solace in Ethiopia’s cheap electricity, the move underscores the intricate interplay between economic opportunities and political risks. While the nation’s power costs and climate conditions make it an attractive destination, the shadow of political uncertainty and potential backlash looms. The evolving landscape of bitcoin mining in Ethiopia remains a compelling narrative, showcasing the delicate balance between economic gains and geopolitical complexities.