Ethiopia has become a lucrative destination for Bitcoin miners with lower energy costs and friendly government policies driving the move.
According to Bloomberg, Bitcoin miners from China and other countries are setting up shop in the East African country followed by energy deals with electricity companies.
Last year, mining equipment including high-powered computers were placed at electric substations connected to the Grand Ethiopian Renaissance Dam showing signs of a departure from other jurisdictions.
In the following months, Bitcoin miners now look to grow operations in Ethiopia and rival Texas counterparts who became the new hub after the mining ban in China two years ago.
Bitcoin Mining Executives Eye Prospects in Ethiopia
Ethiopia gave the green light to cryptocurrency miners two years ago and although trading remains prohibited mining companies will leverage on the reduced energy costs and partnerships with Chinese firms over the years.
Ethan Vera, the Chief Operating Officer of Luxor Technology, a mining services company, projected that Ethiopia is among the world’s top destinations for mining at the moment.
Nou Xu, founder of the China Digital Mining Association explained that Ethiopia will be a destination for Chinese miners thanks to friendly government policies and cheaper energy costs.
Per the Bloomberg report, Ethiopian state-owned power companies have signed agreements with 21 Bitcoin mining companies with 19 of them coming from China.
On the environmental front, Ethiopia’s electricity supply can rival Texas’ ability in a few years with numerous dams and renewable energy sources opening up in recent years.
The country’s GERD power project boosted its production to 5.3 gigawatts and will double Ethiopia’s capacity upon completion.
All this coupled with the lower cost is what crypto miners need to weather the storm amid macroeconomic factors. Vitaliy Borshenko added that the country’s advantages go beyond energy to environmental conditions.
“The ideal temperature for the miners is 5 to 25 degrees” Celsius (41F-77F). That is right in the average range of temperature in Ethiopia.”
All Isn’t Certain for Bitcoin Miners
Despite the surge in Bitcoin miners moving to Ethiopia, future government policies remain uncertain because of the nature of the activity.
China was once the hub of cryptocurrency mining, but the government clamped down on miners, citing environmental factors leading to widespread migration and a slump in asset prices.
Although Ethiopia is looking for new sources of revenue and an inflow of foreign currency in its local market, nearly 50% of the population suffers energy problems.
This fact can cause a shift in government stance in the future as seen in the case of Kazakhstan and other countries that switched from a totally friendly stance to imposing certain limitations on mining activities.
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Nemo Senret, the CEO of QRB Labs noted the steps to get here while highlighting the uncertainty on the part of some miners towards the future.
“Ethiopia is heavily regulated, introducing a new sector like this has been a big challenge, and we’ve been working for the last two years to get all the necessary permissions from the government.”
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