Ethiopia is gradually becoming a Bitcoin mining hub, thanks to its huge supply of hydropower and low electricity prices. Local miners currently consume approximately 600 megawatts of power, and additional power is expected to be available soon. With this rise in activity, Ethiopia has emerged as one of the major cryptocurrency mining destinations in Africa.
Strategic move
The Ethiopian government has taken deliberate steps to establish Favorable environment for 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 larger strategy to embrace technology towards better economic growth, especially after China’s recent ban on cryptocurrency mining, which forced many miners to look elsewhere to sustain operations.
We shared a second @GAMA_alliance Conference in Addis Ababa, Ethiopia
Ethiopia leads Africa in terms of hashrate deployed with 600MW capacity with more hashrate to come.
Luxor looks forward to continuing to support miners in Africa by importing custom hardware and firmware pic.twitter.com/lHKcwxSpSL
– Luxor Technology 🟧⛏️ (@luxor) October 7, 2024
With electricity costing about 3.14 cents per kilowatt hour, the country is an attractive destination for miners using mid-generation hardware like Bitmain’s S19J Pro, said Ethan Vera, co-founder of Luxor Mining.
Not only are these devices cheap in price, they also consume fewer watts of electricity, which is also a vital 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 rapidly growing industry has far-reaching economic repercussions. Analysts expect so Bitcoin Mining may bring the economy about $2 billion to $4 billion. However, it is important to highlight that about half of the country’s population still does not have access to energy.
This raises questions about how the government balances the demands of miners and civilians. The Ethiopian government has shown enthusiasm towards Bitcoin mining as a source of income, but there is the issue of regulatory stability.
Federal Democratic Republic of Ethiopia. Image: African Development Bank Group
The government is currently working on legislation to give a clearer framework for Bitcoin operations, which may help reduce some of the difficulties faced by miners. However, as shown in other areas, regulatory changes can occur quickly and unpredictably.
Challenges ahead
There are positive signs regarding Bitcoin mining in the country, but problems still remain. The country’s regulatory picture is still evolving and several threats of government action are causing concern among many miners. According to industry experts, the current situation may seem attractive, but no one knows whether Ethiopia will continue to encourage Bitcoin mining in the long term.
Moreover, since the government expects to attract international investment through these efforts, it must provide all the energy its citizens need. However, as Ethiopia continues to modernize its infrastructure and revitalize its capabilities, especially through projects such as the Grand Ethiopian Renaissance Dam, it must maintain a balance that will benefit miners and civilians alike.
Featured image from Pexels, chart from TradingView
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