- Despite banning cryptocurrency trading, an African country embraced Bitcoin
mining in 2022 as part of its efforts to strengthen ties with China.
- As concerns about climate change and energy shortages increase criticism globally, the country’s hospitable stance becomes even more appealing.
- A state-owned energy company confirmed agreements to provide electricity to 21 Bitcoin mining firms.
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Chinese Bitcoin miners are moving to exploit the region’s significantly lower electricity costs and crypto-friendly approaches adopted by the local government.
Chinese Miners Might Be Moving to an African Country
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Recent reports suggest that Chinese Bitcoin miners are relocating their operations to the African country Ethiopia due to the region’s low electricity costs and crypto-friendly approaches adopted by the local government.
Despite banning cryptocurrency trading, Ethiopia adopted Bitcoin mining in 2022 as part of its efforts to strengthen ties with China. Chinese companies, playing a significant role in the construction of the $4.8 billion Grand Ethiopian Renaissance Dam, will provide energy to these miners, highlighting the growing partnership between Ethiopia and China over the past decade.
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Amid a global reaction against the energy-intensive Bitcoin mining industry, Ethiopia emerged as an unexpected refuge, offering a rare opportunity for crypto companies. As concerns about climate change and energy shortages increase criticism globally, Ethiopia’s hospitable stance becomes even more appealing.
Ethiopia presents a unique opportunity for Chinese companies, especially as dominant Chinese firms in Bitcoin mining face serious competition from local rivals in Texas, the current center of the industry. The favorable conditions in Ethiopia provide these companies with a chance to revive their position in the sector.
However, this move poses significant risks for both companies and Ethiopia. Previous attempts by developing countries like Kazakhstan and Iran to embrace Bitcoin mining faced challenges when internal unrest arose due to the industry’s energy consumption.
Speaking on the matter, Jaran Mellerud, CEO of Hashlabs Mining, told Bloomberg, “Firstly, countries will run out of electricity for miners to expand. Secondly, miners may suddenly become unwelcome by the government and have to pack up and leave.”
Caution in Ethiopia
Ethiopian authorities are cautious about the contentious nature of Bitcoin mining. Despite increases in energy production capacity, nearly half of the population still lacks access to electricity, making mining a sensitive issue. However, it presents a significant opportunity for earning foreign currency.
Ethiopia has also emerged as a leading destination for mining equipment globally, according to estimates from Luxor Technology, a mining services provider. Ethan Vera, Chief Operating Officer of Luxor, stated that the first significant equipment shipments to Ethiopia were made in September, indicating the country’s significant position in the mining sector.
A state-owned energy company confirmed agreements to provide electricity to 21 Bitcoin mining firms. However, most of these are Chinese-owned, emphasizing foreign investment dominance in this sector in Ethiopia.