Is Ethiopia the Promised Land for Bitcoin Mining?

Feb 9, 2024 | Business, News, Politics | 0 comments

Ethiopia could be emerging as a frontrunner in the global Bitcoin mining scene. With the recent launch of the Grand Ethiopian Renaissance Dam (GERD) power plant, the nation boasts a significantly boosted power supply, projected to double by full capacity. Coupled with some of the cheapest and predominantly renewable electricity on the planet, Ethiopia offers an alluring proposition for an industry increasingly under fire for its environmental impact.

For Bitcoin miners, access to affordable energy is crucial, with electricity costs accounting for up to 80% of operating expenses. Ethiopia’s cheap and clean energy presents a compelling draw, potentially offering miners significant cost savings and an eco-friendly image.

The equation goes beyond mere economics. Following China’s crackdown on cryptocurrencies in 2021, Chinese mining companies have been scouring the globe for new homes. Ethiopia, with its stable political environment and affordable energy, is proving a perfect fit. This aligns with Ethiopia’s broader economic ties with China, the nation’s biggest foreign investor and bilateral creditor. Recent efforts by President Xi Jinping to strengthen relations further assure Chinese miners in Ethiopia.

This stands in stark contrast to Texas, currently the leading Bitcoin mining hub in the US. The industry faces growing uncertainty there due to concerns about escalating tensions between the US and China. Ethiopia, with its seemingly stable relationship with China, offers a different perspective for miners wary of potential disruptions.

While Ethiopia seems poised to capitalise on the Bitcoin mining boom, some points warrant caution. The nation’s reliance on China creates potential concerns about dependence on a single major player. Additionally, the environmental impact of large-scale mining and infrastructure projects requires careful consideration and responsible management.

Ethiopia possesses unique advantages that could propel it to the forefront of the Bitcoin mining industry. However, navigating the economic, political, and environmental complexities will be crucial to ensuring sustainable and responsible growth in this emerging sector.