Ethiopia's allure as a destination for Chinese crypto mining companies is on the rise, fueled by its abundant and affordable electricity, even amid political uncertainties, reports by Bloomberg.
Chinese crypto mining enterprises, shunned by their home country and seeking alternative bases of operations, are increasingly eyeing Ethiopia. While both China and Ethiopia officially prohibit cryptocurrency trading, Ethiopia legalized Bitcoin mining in 2022, opening the door for investment from Chinese firms.
The appeal lies in Ethiopia's remarkably low-cost electricity, with 92% sourced from hydropower. Despite nearly half of Ethiopia's population lacking access to electricity, the nation's attractive power rates draw in mining operations. Additionally, Ethiopia's mild climate is conducive to mining activities, unlike the overheated conditions often faced by miners in places like Texas, USA.
To circumvent regulatory hurdles, some miners disguise their operations as legitimate businesses, such as factories or agricultural projects, to access electricity without explicit approval for Bitcoin mining. However, similar tactics in Iran and Kazakhstan faced shutdowns following government crackdowns. The potential for political instability in Ethiopia further complicates investment decisions, adding an element of risk.
Meanwhile, other African countries, like the Democratic Republic of Congo, leverage hydropower for beneficial purposes, such as supporting national parks and local communities. Despite Ethiopia's appeal as a mining destination, the inherent political risks underscore the complexities and uncertainties facing Chinese crypto mining companies operating abroad.