Ethiopia is set to become the first country in Africa to fully legalize the mining of Bitcoin and other cryptos.
Approximately one week ago, Ethiopian Investment Holdings (EIH), the country’s investment division, signed a deal with West Data Group’s Center Service PLC, based in Hong Kong, to set up infrastructure for bitcoin mining in Ethiopia.
The memorandum of understanding is an agreement for a data mining project that is worth in the region of $250 million.
According to the Ethiopian government’s investment division, the massive project will set up a bitcoin mining project that will be “dedicated to establishing cutting edge infrastructure for data mining and artificial intelligence training operations”, in the East African country.
Ethiopia Is Positioning Herself To Become a Leader in The African Data Hub
According to analysts, the data center niche is projected to grow approximately $5.4 billion by the year 2027.
Ethiopia wants to lead the pack in harnessing the rapidly growing industry.
According to Kal Kassa, the Hashlab Mining CEO for Ethiopia, this move by the country’s government is part of wider efforts to drive and grow their economy by taking advantage of energy sources. This will in turn help attract foreign investment in the country.
Ethiopia has in the past placed strict bans on cryptocurrency trading in the country. But despite the bans, last year the government enacted more lenient data mining legislations that favor high performance computing and data mining. Bitcoin mining conveniently falls under these two classifications.
Inturn, these favorable laws have attracted miners who want to take advantage of the lax regulations, and the abundance of natural resources in Ethiopia. Hydro power especially ensures that energy is cheap in the country.
In 2023, the landlocked nation was number four behind the United States, Hong Kong, and the Asian continent in the list of top destinations for Bitcoin mining rigs.
Bitcluster, a Russian Bitcoin mining company has already set up the first 120 MW bitcoin mining operation in the country. Other companies, such as Hashlabs Mining, are also currently setting up their own data operations.
It is estimated that in a few years, the nation’s energy potential could eventually rival that of Texas, in the United States. Texas’ energy generation is one of the highest in the world. It accounts for an incredible 28.5% of the United State’s 40% global hash rate.
How Will Ethiopia Cope With The Massive Energy Consumption?
There is cause for worry however, as no one can predict how the Ethiopian government will react to the expected increase in energy demand as more Bitcoin mining operations set up camp in the country.
In the past, Kazakhstan and Iran performed a u-turn when bitcoin mining energy demands started competing with domestic needs.
