Watt Matters Most? Ethiopia’s Power Struggle Between Bitcoin and its People
Ethiopia’s burgeoning cryptocurrency mining sector faces an uncertain future as the state-owned Ethiopian Electric Power (EEP) has decided to halt new mining licenses and begin phasing out existing operations. This decision has sent ripples through one of Africa’s rapidly expanding cryptocurrency hubs, despite the industry contributing significantly to the country’s foreign exchange earnings, a crucial resource amidst persistent currency shortages.
The Energy Conundrum: Crypto vs. National Needs
The cryptocurrency mining sector in Ethiopia has rapidly expanded. The industry generated an estimated $220 million in foreign exchange during the last fiscal year, offering a vital economic boost. The decision to curb cryptocurrency mining stems from concerns about its escalating energy consumption, which is now perceived as a threat to national energy security. The growing power demands of these data centers are increasingly unsustainable.
Ethiopia’s emergence as a crypto mining hotspot is a recent phenomenon. In the wake of China’s 2021 crackdown on crypto mining, numerous operators sought refuge in countries with affordable and reliable electricity. Ethiopia, with its low electricity tariffs, supportive regulatory environment, and ample hydropower resources, emerged as an attractive destination. By 2024, the country hosted 25 licensed mining companies, with an additional 20 awaiting approval. This rapid growth reflects Ethiopia’s potential within the African tech landscape, though challenges such as power management will determine its long-term success.
In conclusion, Ethiopia’s choice to restrict crypto mining underscores the delicate balance between attracting foreign investment and safeguarding vital national resources. As the country navigates its energy priorities, the future of its crypto mining sector hangs in the balance.
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