Cheap electricity sees crypto mining converge on Ethiopia
Ethiopian power utility projects US$123m revenue from crypto miners this year
A rising tide of bans on crypto mining across the world and a ready availability of cheap renewable power is making Ethiopia a magnet for crypto miners. BIT Mining, a Chinese cryptocurrency mining company listed on the New York Stock Exchange, recently signed an agreement to acquire 51MW of mining facilities in Ethiopia for about US$14m. The facilities include data centres and mining machines. The deal reflects a growing trend among crypto miners that seek to capitalise on Ethiopia’s low electricity costs. Until now, BIT Mining’s operations were concentrated in the US state of Ohio, where the average cost of electricity is roughly twice that of Ethiopia’s. Most of Ethiopia’s electricity is generated from renewable sources, providing an additional draw for firms like BIT Mining, which hosts mining operations for clients alongside its own activities. The higher cost of electricity in places such as Ohio means BIT Mining can only operate the newest and most energy-efficient mining rigs there to remain competitive. By shifting its older-generation machines to Ethiopia, where electricity is far cheaper, the company can extend the operational lifespan of these rigs, maximising their value before they become obsolete.
The sweeping ban on cryptocurrency mining by China has forced crypto firms like BIT Mining to relocate their operations. The state-owned Ethiopia Electric Power (EEP) utility has already registered approximately 20 crypto mining companies, mainly from China, with around a dozen actively operating. During its previous reporting year, EEP earned US$55m from Bitcoin miners and forecasts US$123m in revenue from the sector in the current year. Crypto mining also brings the Ethiopian government much-needed foreign currency, as these companies pay for electricity in US dollars, addressing the country’s acute shortages. Ethiopia currently accounts for 2.5% of the global hash rate, a measure of the computational power dedicated to Bitcoin mining.
As of early 2024, Ethiopia had an installed electricity generation capacity of 5,200 MW, of which approximately 90% came from hydropower, with the remainder supplied by wind (8%) and thermal (2%) sources. The government has set a target of increasing power generation capacity to 17,000 MW over the next decade. Last year, the country more than doubled electricity production at the Grand Ethiopian Renaissance Dam following the activation of two additional turbines, each generating 400 MW. These new turbines add to the two previously operational turbines, which produce 375 MW each, bringing the dam's total power generation to 1,550 MW.
Ethiopia’s temperate climate is another draw for Bitcoin miners. The capital Addis Ababa, located at an altitude of 2,355 metres, benefits from cooler temperatures, which help reduce the high cooling costs typically associated with crypto mining equipment.
However, the burgeoning industry is not without risks. In other developing countries, such as Kazakhstan and Iran, Bitcoin mining has triggered a domestic backlash over its heavy energy demands and the reputational damage that comes with it. The global crypto industry has been beset by problems including accusations of fraud and excessive use of electricity. Ethiopia faces similar challenges, with just 55% of its population currently having access to electricity at their homes. Some stakeholders argue that the government must channel revenues from crypto miners into expanding access to the grid for the millions of Ethiopians still without electricity. As Ethiopia’s crypto mining sector grows, the government will need to strike a delicate balance between attracting foreign investment and ensuring equitable energy distribution for its citizens.
References
‘Ethiopia - country commercial guide’, International Trade Administration, 18 January 2024
‘Chinese bitcoin miners find a new crypto haven in Ethiopia’, Bloomberg, 07 February 2024
‘Bloomberg: Chinese Bitcoin mining companies flocking to Ethiopia for cheap electricity’, Yahoo Finance, 13 February 2024
‘Ethiopia to set up large data centre amid reported bitcoin mining surge’, Reuters, 16 February 2024
‘EEP begins selling electric power to data miners in foreign currency’, Ethiopian Monitor, 23 February 2024
'Why is Ethiopia a major hub for bitcoin mining?', BBC News Africa, 28 November 2024
'BIT Mining to acquire Ethiopian mining data centers and mining machines', BIT Mining, 03 December 2024
'BIT Mining completed the first phase of acquisition in Ethiopia', BIT Mining, 09 December 2024
'How Ethiopia’s low energy costs allow BIT Mining to recycle its bitcoin machines', CoinDesk, 07 January 2025
'Chinese crypto mining giant taps Ethiopia’s energy for new 51MW facility', CCN, 08 January 2025