May 26, 2024
Bitcoin News

Ethiopia Emerges as a Bitcoin Mining Hotspot Amid Favorable Conditions

Ethiopia is quickly gaining traction as a preferred destination for Bitcoin miners, attracting attention from China and beyond. The East African nation’s lower energy costs and favorable government policies have spurred a surge in mining activities.

According to a recent report by Bloomberg, Bitcoin miners, including those from China, are establishing operations in Ethiopia, capitalizing on energy deals with local electricity companies. Mining equipment, including high-powered computers, has been strategically placed at electric substations connected to the Grand Ethiopian Renaissance Dam, marking a distinctive departure from other jurisdictions.

Ethiopia opened its doors to cryptocurrency miners two years ago, offering a welcoming environment with reduced energy costs and partnerships with Chinese firms. As a result, Bitcoin miners are looking to expand their operations in Ethiopia, aiming to rival their counterparts in Texas, which became a hub following China’s mining ban two years ago.

Ethan Vera, Chief Operating Officer of Luxor Technology, views Ethiopia as one of the world’s top destinations for mining at the moment. Nou Xu, founder of the China Digital Mining Association, attributes the appeal to friendly government policies and cost-effective energy.

Ethiopian state-owned power companies have inked agreements with 21 Bitcoin mining companies, 19 of which hail from China, according to the Bloomberg report. The country’s abundant dams and renewable energy sources position it as a potential rival to Texas’ energy supply in the coming years.

Despite the positive outlook, challenges loom on the horizon. Ethiopia’s future government policies concerning cryptocurrency mining remain uncertain. China, once a cryptocurrency mining hub, shifted its stance due to environmental concerns, causing a mass migration of miners and a decline in asset prices.

While Ethiopia seeks new sources of revenue and foreign currency, approximately 50% of its population faces energy problems. This could potentially influence the government’s stance in the future, as witnessed in the case of Kazakhstan and other countries that initially embraced mining but later imposed limitations.

Nemo Senret, CEO of QRB Labs, acknowledges the hurdles faced in introducing a new sector like cryptocurrency mining in a heavily regulated environment. Senret highlighted the ongoing efforts over the past two years to secure necessary permissions from the Ethiopian government, reflecting the uncertainty that persists among some miners about the future of their operations in the country.

Image from Ethiopia Insight

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