12 Feb 2024
Driven by low electricity costs and a ban on mining in their home country, Chinese crypto mining companies are setting up shop in Ethiopia, according to a Bloomberg report. However, the East African nation’s volatile political climate poses potential challenges.
Following China’s ban on cryptocurrency mining in 2021, Chinese companies have scrambled to find new havens. Ethiopia, which legalized Bitcoin mining in 2022 but bans trading, has emerged as a top destination. As of now, 19 out of 21 companies with deals with Ethiopia’s power monopoly are Chinese.
The allure lies in Ethiopia’s incredibly cheap electricity, 92% of which comes from hydropower. This is despite nearly half the population lacking access to electricity. Additionally, Ethiopia’s cool climate offers natural cooling for mining rigs, unlike hotter regions like Texas, where cooling costs are higher.
Despite the advantages, Bloomberg highlights the potential risks associated with Ethiopia’s uncertain political situation, which could impact investments and operations.
