Chinese Bitcoin miners have set their sights on Ethiopia in a strategic move driven by the pursuit of cheap energy and favorable climates.
Last spring, cargo containers near electricity substations linked to Africa’s largest hydroelectric project, the Grand Ethiopian Renaissance Dam (GERD), signaled the arrival of Chinese miners.
Ethiopia Emerges as Prime Destination for Chinese Miners
Having been displaced from China due to regulatory restrictions, local Bitcoin miners have been searching for locations offering affordable power and friendly regulations.
Offering some of the world’s lowest electricity costs and a government increasingly receptive to their presence, Ethiopia presents a unique opportunity for Bitcoin miners amidst growing global scrutiny of the industry’s energy consumption and environmental impact.
Luxor Technology estimates Ethiopia has become one of the top destinations for Bitcoin mining equipment shipments, with Chinese miners comprising a significant portion. These miners benefit from Ethiopia’s abundant hydropower resources and the competitive electricity rates Ethiopian Electric Power (EEP) provides.
Ethiopia’s installed generation capacity stands at 5.3 gigawatts, primarily sourced from renewable hydropower, making it an appealing location for miners seeking sustainability. Once dominant in Bitcoin mining, Chinese firms face stiff competition in traditional hubs like Texas.
EEP charges a fixed rate of 3.14 US cents per kilowatt-hour, comparable to rates in Texas but with greater stability. Moreover, Ethiopia’s temperate climate aligns well with the optimal operating conditions for mining rigs.
A Risky Venture with Economic Prospects
Ethiopia, while still prohibiting cryptocurrency trading, permitted Bitcoin mining in 2022. This decision was reinforced by the nation’s growing ties with China, with several Chinese firms contributing to constructing the $4.8 billion GERD, from which miners intend to draw their power.
As Chinese Bitcoin miners flock to Ethiopia, geopolitical dynamics come into play, with China’s investments in the country strengthening bilateral ties. Ethiopia’s eagerness to attract foreign investment aligns with China’s broader strategy in Africa, fostering a mutually beneficial relationship between the two nations.
However, this venture has its risks. Ethiopian officials tread cautiously due to the controversies surrounding Bitcoin mining, mindful of the balance between economic gains and social impacts.
Beyond the economic advantages for Ethiopia, concerns remain over the equitable distribution of resources, especially in a country where nearly half the population lacks access to electricity.
Amidst uncertainties about regulatory oversight and long-term implications, Chinese Bitcoin miners still perceive Ethiopia as a promising frontier in their search for inexpensive energy and favorable operating conditions.