Ethiopia Invests $250M to Develop Bitcoin Mining Infrastructure, Signs MoU with Data Center Service
In Brief
Ethiopia’s Investment Holdings signed an MoU with Data Center Service to establish an advanced infrastructure for bitcoin mining operations.
Strategic Investment arm of the Government of Ethiopia, Ethiopian Investment Holdings signed a Memorandum of Understanding (MoU) with Data Center Service, a subsidiary of Hong Kong’s West Data Group, to collaboratively establish an advanced infrastructure for data mining operations in Ethiopia.
According to CEO for Ethiopia at Hashlabs Mining — Kal Kassa’s post on X, the Ethiopian Government’s new partnership with Data Center Service will allow it to engage in Bitcoin mining.
The Ethiopian government has established a sandbox for experimenting with issuing licenses for “cryptographic products.” Moreover, the country has become a unique opportunity for companies engaged in mining the original cryptocurrency, particularly as concerns over climate change and power shortages prompt a reevaluation of the $16 billion-a-year industry.
This opportunity is particularly attractive to Chinese companies, who were once dominant in Bitcoin mining but are now restricted due to the local ban on mining and trading, even though such activities still persist.
Presently, Ethiopia hosts 21 cryptocurrency miners, with 19 of them being of Chinese origin. Buffeted by political and economic challenges, these companies were attracted by the globally competitive electricity rates and a government that has shown increasing support for its operations.
In 2022, Ethiopia permitted Bitcoin mining, although cryptocurrency trading remains prohibited. The country has strengthened its diplomatic relations with China over the past decade, and several Chinese companies were involved in constructing the $4.8 billion dam from which the miners source their power.
Ethiopia Emerges as a Power Player in Cryptocurrency Mining
The mining rigs require substantial power, making access to cost-effective electricity a crucial factor for competitive advantage. In 2023, Bitcoin mining reportedly consumed 121 terawatt-hours of power, a figure comparable to the energy consumption of Argentina, as estimated by the Cambridge Centre for Alternative Finance. Furthermore, electricity expenses constitute up to 80% of miners’ operating costs.
This clarifies why the placement of mining equipment has been predominantly influenced by the availability of inexpensive power in recent years. Initially, miners were drawn to China, but most recently Texas. The common denominator is the presence of relatively affordable energy resources.
The combination of cost-effective energy and governments’ support of cryptocurrency becomes especially crucial to maintain companies’ profit margins in the highly competitive landscape of cryptocurrency mining, which becomes particularly important amid Bitcoin “halving” events that significantly diminish rewards for token production. Additionally, providing opportunities for Bitcoin mining operations to foreign companies represents a substantial revenue source for Ethiopia.
Thus, the recent strategic partnership between Ethiopian Investment Holdings and Data Center Service highlights Ethiopia’s growing significance in cryptocurrency mining.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
