Ethiopia may soon become the most popular location for Chinese cryptocurrency companies to operate.
Publika.az “Bloomberg” reported on this.
It is said that this is due to the fact that the price of electricity in the country is the lowest in the world after the commissioning of Africa’s largest hydroelectric power plant (SEP).
“Ethiopia will be the most popular destination for Chinese miners,” said No Xu, founder of China Digital Mining Association.
Bloomberg explains that the country’s main competitive advantage is a rare combination of soft government regulation of the industry and low electricity prices.
Cryptocurrency mining equipment requires large amounts of electricity; energy costs can account for 80% of all miners’ costs. According to Cambridge University estimates, companies will use around 121 terawatt-hours globally in 2023 on Bitcoin mining alone, which is comparable to the energy consumption of Argentina. Some governments are trying to restrict cryptocurrency mining due to threats to energy security. For example, in 2013, the People’s Bank of China (the central bank) banned financial institutions from dealing, selling or holding cryptocurrencies. A complete ban on mining in the country was introduced in 2021.
The Ethiopian authorities, on the other hand, allowed the withdrawal of cryptocurrencies in 2022. However, the electricity bill is charged in foreign currency, which allows the government to offset the deficit.
As a result, in just one year, the country rose to the second place in the world (after Texas) for the purchase of mining equipment. According to Bloomberg’s calculations, within a few years, the development of the energy complex in the African country will be able to provide it with a leading position in the digital currency mining industry.
Tural
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