Chinese Bitcoin miners, expelled from their native land, are now turning their attention to Africa, specifically Ethiopia, drawn by the prospect of affordable electricity. The epicenter of this emerging trend is the Grand Ethiopian Renaissance Dam, the largest in Africa.Thank you for reading this post, don't forget to subscribe!
Ethiopia is rapidly becoming a hub for Bitcoin mining, thanks to its exceptionally low electricity costs, among the most competitive globally, and a government increasingly receptive to the idea of Bitcoin mining operations. Ethan Vera, Chief Operations Officer at Luxor Technology, emphasized the unique appeal of Ethiopia, stating, “Ethiopia offers a unique combination of affordable power and a government that is welcoming Bitcoin mining.”
However, this shift is not without its challenges. Despite improvements since 2016, approximately half of Ethiopia’s population still lacks access to electricity in 2024. This creates a delicate equilibrium between embracing the lucrative Bitcoin mining sector and addressing the pressing domestic energy needs.
This migration pattern mirrors the trajectory seen in Kazakhstan after China’s 2021 ban on Bitcoin mining. Initially, Kazakhstan witnessed a surge in miners attracted by its proximity to China, abundant energy resources, and favorable regulatory climate. However, the industry’s rapid expansion resulted in energy shortages and regulatory hurdles, leading to a substantial decline.
As Chinese miners navigate the intricacies of establishing operations in Ethiopia, they find themselves in a geopolitically advantageous position. China, being Ethiopia’s primary source of foreign investment, has provided substantial support for various projects in the country. This relationship, combined with Ethiopia’s requirement for foreign currency inflows, sets the stage for a potentially symbiotic association.
Nevertheless, the global Bitcoin mining sector is evolving under the influence of diverse factors, including geopolitical dynamics, environmental concerns, and the pursuit of sustainable energy sources. While Chinese miners embark on this new venture in Ethiopia, the cautionary tale of Kazakhstan emphasizes the need for a meticulous approach that balances industry growth with broader economic and environmental considerations.