Ethiopia's cheap electricity is attracting Chinese mining companies: Bloomberg
Quick Take
- Lured by cheap electricity costs and rejected by their native country, Chinese crypto mining companies are increasingly investing in operations in Ethiopia.
- However, an uncertain political situation presents potential risks, according to a report in Bloomberg.
Chinese crypto mining companies are increasingly turning towards Africa, and Ethiopia in particular, for their mining operations, according to a new report in Bloomberg.
Ethiopia, like China, officially bans cryptocurrency trading, but the country legalized Bitcoin mining in 2022. Now, Chinese companies which have spent the years since China's 2021 cryptocurrency ban searching for a new investment hub are increasingly investing in operations inside the African nation.
According to Bloomberg, 19 of the 21 companies which have struck deals with Ethiopia's power monopoly are Chinese. Miners are attracted by Ethiopia's cheap electricity, of which 92% is provided by hydropower, even though nearly half of all Ethiopians live without access to electricity. Ethiopia's temperate climate is also favorable to mining operations, while Texas, the United States' biggest hub for mining, often faces higher temperatures, making cooling the machines more costly.
Some miners may even present themselves as different operations, like factories or agricultural projects, in order to access electricity without official state approval for Bitcoin mining, according to the report. However, similar operations in Iran and Kazakhstan were shut down after sudden government reversals; a potential political upheaval in Ethiopia makes investing there a gamble, according to the report.
Elsewhere in Africa, hydropower has also been used in the Democratic Republic of Congo to benefit a national park and its local population.
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