Chinese bitcoin miners have officially arrived in Ethiopia.
With China banning bitcoin mining about two years ago, many miners look to be heading to Africa’s largest dam, the recently built Grand Ethiopian Renaissance Dam, according to a new article from Bloomberg.
Nuo Xu, founder of China Digital Mining Association, told Bloomberg: “Ethiopia will become one of the most popular destinations for Chinese miners.”
There they are being lured by some of the cheapest energy costs in the world – and the dam is providing power to run miners at electricity substations.
Ethiopia’s closer ties with China and the construction of a $4.8 billion dam by Chinese companies for electricity supply underscore the move, the report says. The change of location comes as climate concerns and energy shortages elsewhere in the world have prompted some backlash against the lucrative Bitcoin mining industry.
This makes Ethiopia a uniquely appealing prospect, though it now faces competition in places like Texas, Bloomberg writes. Kazakhstan and Iran initially welcomed Bitcoin mining, but eventually turned on the sector due to its massive energy use.
Jaran Mellerud, chief executive of Hashlabs Mining, said: “Firstly, countries can run out of available electricity, leaving no room for miners to expand. Secondly, miners can suddenly be deemed unwelcome by the government and be forced to pack up and leave.”
Ethiopian officials are still cautious about Bitcoin mining’s contentious nature, industry insiders reveal, prioritizing government relations. Despite new power sources, nearly half the population lacks electricity, making mining a sensitive issue yet a promising avenue for foreign currency.
The competition for electricity between miners, factories, and households can lead to political issues due to the sector’s high power demand. Bloomberg writes that in Kazakhstan, new restrictions and taxes devastated the mining industry, leaving facilities like the one owned by Hashlabs co-founder Alen Makhmetov unused.
Additionally, Bitcoin mining’s environmental impact, particularly its contribution to global warming, is under scrutiny despite claims of shifting towards clean energy. A United Nations University study found that two-thirds of the power for Bitcoin mining in 2020 and 2021 came from fossil fuels, highlighting the industry’s sustainability challenges. Bitcoin advocates point to the fact that nuclear energy is finally starting to become mainstream in several places across the world.
Meanwhile the national power monopoly in Ethiopia has secured agreements with 21 Bitcoin miners, predominantly Chinese, making clear the country’s emerging role in the sector.
In a recent article called “Why I Bitcoin“, Zero Hedge contributor Quoth the Raven wrote:
“If the people want the Bitcoin network, and they have power and an Internet connection, they’re going to get it. The network is like a slippery fish someone tries to hold onto — the harder you hold it and the more you try to control it, the quicker it slips from your grasp. If Canada bans it, it will drift to Mexico. If Mexico bans it, nodes will drift to Mauritius. If Mauritius bans it, nodes will drift to Russia. There’s always going to be somewhere on the globe – at least for the short to mid-term right now – that is going to embrace Bitcoin.”
In this case, that place is – at least for now – Ethiopia.
Tyler Durden
Sat, 02/10/2024 – 07:35
