May 2, 2024 • 12 mins
Crypto mining is an energy-intensive process. So miners are always on the lookout for the best place to operate. The United States and Hong Kong are known hosts for mining. But lately another country stands out: Ethiopia.
On this week’s Next Africa Podcast, host Jennifer Zabasajja speaks with Bloomberg’s reporter Fasika Tadesse about how Ethiopia is now seen as a growth market in the crypto industry - especially for Chinese miners. A move that is not welcomed by everyone in the country.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Bitcoin hasn't had the best couple of months, but is
well up on the lows of last year, and its
cheerleaders are bullish.
Speaker 2 (00:12):
I think we're seeing more long term holders. Bitcoin has
a lot of value.
Speaker 1 (00:16):
We can actually expect over one hundred K and pricing
by end of year.
Speaker 3 (00:20):
You can learn a lot from watching what the miners
are doing. They've been investing, They've obviously been betting their
businesses on the price of bitcoin going up, and it
looks like they're about to win their bet.
Speaker 1 (00:31):
With the renewed attention, focus has turned to mining of
the token and the best places to do it. In
years past, many cryptocurrency miners would have been investing in China,
but that's not an option anymore.
Speaker 3 (00:49):
Minu is us shutting down they computer is.
Speaker 1 (00:51):
In twenty twenty one, the Chinese government called a crackdown
on the cryptocurrency industry.
Speaker 3 (00:56):
They said their own crypto related transaction will be considered
illicit activity.
Speaker 1 (01:02):
And that's how some crypto miners left China and moved
their operations to places like Ethiopia, a stable economy, perfect
weather conditions, and some of the world's lowest electricity costs.
When we talk about crypto mining. It seems like Ethiopia
has it all, but in a country with power scarcity
(01:24):
and increasing climate change concerns, how viable is this industry Already?
Speaker 2 (01:30):
The government started to receive a backlash from different people
from the country, saying supplying power to the mining company
is not right. Why half of the population doesn't have
access to power.
Speaker 1 (01:47):
I'm Jennifer's Abasaja. This is the Next Africa podcast, bringing
you one story each week from the continent with the
context only Bloomberg can provide. In this week's episode, Bloomberg
reporter Fasika Tedessa speaks to us from Adis Ababab about
whether Ethiopia is really primed to be the new crypto
(02:07):
mining heaven. So how did Chinese miners set their hearts
on Ethiopia. Let's bring in Fisica Tedesa joining us from
Adis Ababa, Halfaska. So what are the reasons behind the
shifts and why miners are now looking to Ethiopia.
Speaker 2 (02:23):
In twenty twenty two, the government has made a change
in the policy in letting it coin mining companies to
get registered and the start operating in Ethiopia. The second
one is the ideal or favorable climate Ethiopia has for
bitcoin mining, so basically bitcoin mining needs five to twenty
five said, Whichitopia has.
Speaker 1 (02:45):
What are the other reasons then Pasica.
Speaker 2 (02:47):
Another benefit lies in the abundance electricity power in Ethiopia.
So currently the country has a little over five thy
two hundred mega out of energy, so we possibly of
doubling that capacity in the coming few years once the
Ethopian Grand Renaissance m which is the largest in Africa,
becomes operational. The other major factor that attracted Chinese companies
(03:12):
to come to Ethiopia is the low electricity cost. Power
agencies charging bitcoin mining companies affixed rate that at three
point one for US and s per kilo at an
hour for electricity sources from the power sub stations connected
to coin mining facilities.
Speaker 1 (03:31):
And you would think it might make more sense to
operate and mine in China, but how come they've chosen
not to.
Speaker 2 (03:38):
The reason given by the Chinese government was that bitcoin
mining has impacts on the environment and also at the
same time, cryptocurrency trading can be used for fraudulent activities
and money laundering. So because of that, Chinese companies we're
looking for a better place to work or to operate
in Pasica.
Speaker 1 (03:58):
You mentioned the environment. Bigcoin absolutely is an industry that
consumes a lot of energy.
Speaker 3 (04:05):
A single ledger entry and bitcoin consumes enough energy to
power your house for almost to day.
Speaker 1 (04:11):
What's a climate crisis? Surely being in Ethiopia, there are
still a number of environmental concerns. So why then was
Ethiopia so willing.
Speaker 2 (04:23):
The government highly leads these companies to come to Ethiopia
because the government can directly generate income in foreign currency.
So the other part is from the investment perspective. Because
of the deadly war that happened in the northern part
of the country, most of the investors lost confidence in
(04:43):
investing in to Okay. So these are the two major
reasons that the government is allowing companies to come to
topid despite the butlers and the environment.
Speaker 1 (04:53):
What can you tell us about the bilateral relations between
these two countries. There must be some political elements to
this as well.
Speaker 2 (05:02):
China stands as one of the major bilateral creditors to Ethiopia,
and also Chinese companies are known for holding the first
place in FDI or foreign investment flows into Ethiopia, and
also several Chinese companies has held construction of the largest
dam of Ethiopia and also they built the major railway
(05:25):
that Connectsopia with Dawooty. They also built the major or
the main airport of Ethiopia. This economic and political activity
shows that there is a strong tie between Ethiopia and China.
Speaker 1 (05:37):
So, Piska, earlier you mentioned the dam and how China
helped build it. The four point eight billion dollars dam,
and it's one of the largest on the continent, as
you mentioned, can you talk to us about its significance,
especially when we think about that dam in relation to
now what's happening with bitcoin mining.
Speaker 2 (05:56):
Yes, Jennifer, as you said, it's one of the largest
dums in Africa. Is the capacity of generating five two
hundred megallards of energy. So the government highly relies on
this term since it will help the country to boost
its power generating capacity with the aim of exporting more
power to never in countries including Djibouti, Sudan, Kenya, and
(06:19):
also they are planning to move sell power to Tanzania.
And also not to forget that they are signing deals
with bitcoin mining companies which require intensive power supplies.
Speaker 1 (06:37):
So how can Ethiopia grow an industry that needs intensive power. Well,
half of its population doesn't actually have access to electricity.
That's after the break welcome back. Fifty percent of the
(06:58):
Ethiopian population and live without electricity. So it feels a
bit contradictory to then bring something that is power intensive
into this country. How do you explain that?
Speaker 2 (07:12):
Yeah, that's right. Basically, the government is trying to give
to justification. One, they say that they can't generate additional
income by sailing power to bitcoin mining companies, so that
they will build transmission lines and enable the people that
are not connected to power to get more power supply.
(07:32):
So that's one of the justification that government is giving.
The second one is they are saying that they are
sailing surplus power from the local demand and the deal
is not impacting the domestic power availability.
Speaker 1 (07:47):
Is there any evidence that that's actually happening, that this
deal and the miners are not actually affecting local supply.
Do we have any indications at this point whether or
not it's having an impact? Maybe is it just too
early to tell.
Speaker 2 (08:02):
Now the companies signed the power perponse agreement with the government,
a few of them have imported the marsionaries they will
be using for mining and the installation process, so not
many of them started operating, so it would be hard
to say the power supply or the power demand has
been affected by this company, so it's a bit too early.
Speaker 1 (08:24):
So then Fasika, what's the benefit here for Ethiopia? You
walked us through a lot of the different reasons as
to why China is looking to this country. But on
the contrary, what's in it for Ethiopia.
Speaker 2 (08:37):
One of the significant advantages is revenue generation from the
sale of power, so which the country will be getting
paid in dollars, So this will help severe for its
crunching that in the economy. Okay is exporting commodities that
is not more than three point one billion dollars a
year while the import value is three times hired, so
(09:02):
this will help the country to get more income in
foreign currency.
Speaker 1 (09:06):
A succession of developing countries like Kazakhstan and others initially
embraced bitcoin mining, only to then turn on the sector
when they realized its energy use actually threatened to fuel
discontent among its population. I mean, is that something that
could also happen in Ethiopia.
Speaker 2 (09:25):
Yes, there are risks. The first one is the country's stability,
So considering the nature of bitcoin mining, which requires intensive
power supply and the capital in most of the power
substations are located in CONFLICTWN areas, so.
Speaker 1 (09:39):
That's right physica. For context, it's important to note the
civil war that happened in Ethiopia back in twenty twenty
and just how recent that was.
Speaker 4 (09:51):
The conflict between the Tagrii region and its political entity
that to Grive People's Liberation Front and the Ethiopian government
run by Prime Ministers Abby Ahmored began on November four
after the Prime Minister accused the tpof of attacking a
federal military base.
Speaker 3 (10:08):
We estimate that two point three million people are in
urgent needs of humanitarian assistance in Tiger, including one point
three million additional people due to conflict, and.
Speaker 2 (10:18):
He still was broken by the African Union in twenty
twenty two, so the country is relatively stable now, even
though there are conflicts in different parts of the country.
Another risk arises if there is a persistent backlash and
an increase in local demand. This could be potentially leaved
to a change in the government's policies because, as I
(10:41):
previously mentioned, half of the population currently experiencing blackout conditions
and at some point the government will leave to provide
power to this segment of the population. And additionally, if
more industries require additional power, and if there are concerns
about the environmental infower of bigcoin minings and the current
(11:02):
flexibility from the government side may not be sustainable in
the future. So this scenario could lead to the situation
in Kazakhstan where lack of available partly to the imposition
of additional taxes on coin companies, which we're forced to
leave Kazakistan and to find that another locations to reside on.
Speaker 1 (11:26):
Thanks so much to Fasika, a reporter from Addis Ababa,
for your insight and your reporting there. As Fasika mentioned,
bitcoin mining is a risky gamble for both Ethiopia and
the companies alike. Is there sufficient enough energy for mining
to expand in the country and give miners that competitive
(11:48):
advantage that they're seeking, but also is it even going
to be welcomed by the public. Perhaps the only guarantee
for all parties involved is the volid utility in which
crypto continues to operate in And that's it for this week.
(12:10):
If you like the Next Africa podcast, please follow and
review it wherever you usually get your podcast. It helps
new followers find the show. I'm Jennifer Zabasaja. Thank you
so much for listening. We'll see you next week.
Bitcoin hasn't had the best couple of months, but is
well up on the lows of last year, and its
cheerleaders are bullish.
Speaker 2 (00:12):
I think we're seeing more long term holders. Bitcoin has
a lot of value.
Speaker 1 (00:16):
We can actually expect over one hundred K and pricing
by end of year.
Speaker 3 (00:20):
You can learn a lot from watching what the miners
are doing. They've been investing, They've obviously been betting their
businesses on the price of bitcoin going up, and it
looks like they're about to win their bet.
Speaker 1 (00:31):
With the renewed attention, focus has turned to mining of
the token and the best places to do it. In
years past, many cryptocurrency miners would have been investing in China,
but that's not an option anymore.
Speaker 3 (00:49):
Minu is us shutting down they computer is.
Speaker 1 (00:51):
In twenty twenty one, the Chinese government called a crackdown
on the cryptocurrency industry.
Speaker 3 (00:56):
They said their own crypto related transaction will be considered
illicit activity.
Speaker 1 (01:02):
And that's how some crypto miners left China and moved
their operations to places like Ethiopia, a stable economy, perfect
weather conditions, and some of the world's lowest electricity costs.
When we talk about crypto mining. It seems like Ethiopia
has it all, but in a country with power scarcity
(01:24):
and increasing climate change concerns, how viable is this industry Already?
Speaker 2 (01:30):
The government started to receive a backlash from different people
from the country, saying supplying power to the mining company
is not right. Why half of the population doesn't have
access to power.
Speaker 1 (01:47):
I'm Jennifer's Abasaja. This is the Next Africa podcast, bringing
you one story each week from the continent with the
context only Bloomberg can provide. In this week's episode, Bloomberg
reporter Fasika Tedessa speaks to us from Adis Ababab about
whether Ethiopia is really primed to be the new crypto
(02:07):
mining heaven. So how did Chinese miners set their hearts
on Ethiopia. Let's bring in Fisica Tedesa joining us from
Adis Ababa, Halfaska. So what are the reasons behind the
shifts and why miners are now looking to Ethiopia.
Speaker 2 (02:23):
In twenty twenty two, the government has made a change
in the policy in letting it coin mining companies to
get registered and the start operating in Ethiopia. The second
one is the ideal or favorable climate Ethiopia has for
bitcoin mining, so basically bitcoin mining needs five to twenty
five said, Whichitopia has.
Speaker 1 (02:45):
What are the other reasons then Pasica.
Speaker 2 (02:47):
Another benefit lies in the abundance electricity power in Ethiopia.
So currently the country has a little over five thy
two hundred mega out of energy, so we possibly of
doubling that capacity in the coming few years once the
Ethopian Grand Renaissance m which is the largest in Africa,
becomes operational. The other major factor that attracted Chinese companies
(03:12):
to come to Ethiopia is the low electricity cost. Power
agencies charging bitcoin mining companies affixed rate that at three
point one for US and s per kilo at an
hour for electricity sources from the power sub stations connected
to coin mining facilities.
Speaker 1 (03:31):
And you would think it might make more sense to
operate and mine in China, but how come they've chosen
not to.
Speaker 2 (03:38):
The reason given by the Chinese government was that bitcoin
mining has impacts on the environment and also at the
same time, cryptocurrency trading can be used for fraudulent activities
and money laundering. So because of that, Chinese companies we're
looking for a better place to work or to operate
in Pasica.
Speaker 1 (03:58):
You mentioned the environment. Bigcoin absolutely is an industry that
consumes a lot of energy.
Speaker 3 (04:05):
A single ledger entry and bitcoin consumes enough energy to
power your house for almost to day.
Speaker 1 (04:11):
What's a climate crisis? Surely being in Ethiopia, there are
still a number of environmental concerns. So why then was
Ethiopia so willing.
Speaker 2 (04:23):
The government highly leads these companies to come to Ethiopia
because the government can directly generate income in foreign currency.
So the other part is from the investment perspective. Because
of the deadly war that happened in the northern part
of the country, most of the investors lost confidence in
(04:43):
investing in to Okay. So these are the two major
reasons that the government is allowing companies to come to
topid despite the butlers and the environment.
Speaker 1 (04:53):
What can you tell us about the bilateral relations between
these two countries. There must be some political elements to
this as well.
Speaker 2 (05:02):
China stands as one of the major bilateral creditors to Ethiopia,
and also Chinese companies are known for holding the first
place in FDI or foreign investment flows into Ethiopia, and
also several Chinese companies has held construction of the largest
dam of Ethiopia and also they built the major railway
(05:25):
that Connectsopia with Dawooty. They also built the major or
the main airport of Ethiopia. This economic and political activity
shows that there is a strong tie between Ethiopia and China.
Speaker 1 (05:37):
So, Piska, earlier you mentioned the dam and how China
helped build it. The four point eight billion dollars dam,
and it's one of the largest on the continent, as
you mentioned, can you talk to us about its significance,
especially when we think about that dam in relation to
now what's happening with bitcoin mining.
Speaker 2 (05:56):
Yes, Jennifer, as you said, it's one of the largest
dums in Africa. Is the capacity of generating five two
hundred megallards of energy. So the government highly relies on
this term since it will help the country to boost
its power generating capacity with the aim of exporting more
power to never in countries including Djibouti, Sudan, Kenya, and
(06:19):
also they are planning to move sell power to Tanzania.
And also not to forget that they are signing deals
with bitcoin mining companies which require intensive power supplies.
Speaker 1 (06:37):
So how can Ethiopia grow an industry that needs intensive power. Well,
half of its population doesn't actually have access to electricity.
That's after the break welcome back. Fifty percent of the
(06:58):
Ethiopian population and live without electricity. So it feels a
bit contradictory to then bring something that is power intensive
into this country. How do you explain that?
Speaker 2 (07:12):
Yeah, that's right. Basically, the government is trying to give
to justification. One, they say that they can't generate additional
income by sailing power to bitcoin mining companies, so that
they will build transmission lines and enable the people that
are not connected to power to get more power supply.
(07:32):
So that's one of the justification that government is giving.
The second one is they are saying that they are
sailing surplus power from the local demand and the deal
is not impacting the domestic power availability.
Speaker 1 (07:47):
Is there any evidence that that's actually happening, that this
deal and the miners are not actually affecting local supply.
Do we have any indications at this point whether or
not it's having an impact? Maybe is it just too
early to tell.
Speaker 2 (08:02):
Now the companies signed the power perponse agreement with the government,
a few of them have imported the marsionaries they will
be using for mining and the installation process, so not
many of them started operating, so it would be hard
to say the power supply or the power demand has
been affected by this company, so it's a bit too early.
Speaker 1 (08:24):
So then Fasika, what's the benefit here for Ethiopia? You
walked us through a lot of the different reasons as
to why China is looking to this country. But on
the contrary, what's in it for Ethiopia.
Speaker 2 (08:37):
One of the significant advantages is revenue generation from the
sale of power, so which the country will be getting
paid in dollars, So this will help severe for its
crunching that in the economy. Okay is exporting commodities that
is not more than three point one billion dollars a
year while the import value is three times hired, so
(09:02):
this will help the country to get more income in
foreign currency.
Speaker 1 (09:06):
A succession of developing countries like Kazakhstan and others initially
embraced bitcoin mining, only to then turn on the sector
when they realized its energy use actually threatened to fuel
discontent among its population. I mean, is that something that
could also happen in Ethiopia.
Speaker 2 (09:25):
Yes, there are risks. The first one is the country's stability,
So considering the nature of bitcoin mining, which requires intensive
power supply and the capital in most of the power
substations are located in CONFLICTWN areas, so.
Speaker 1 (09:39):
That's right physica. For context, it's important to note the
civil war that happened in Ethiopia back in twenty twenty
and just how recent that was.
Speaker 4 (09:51):
The conflict between the Tagrii region and its political entity
that to Grive People's Liberation Front and the Ethiopian government
run by Prime Ministers Abby Ahmored began on November four
after the Prime Minister accused the tpof of attacking a
federal military base.
Speaker 3 (10:08):
We estimate that two point three million people are in
urgent needs of humanitarian assistance in Tiger, including one point
three million additional people due to conflict, and.
Speaker 2 (10:18):
He still was broken by the African Union in twenty
twenty two, so the country is relatively stable now, even
though there are conflicts in different parts of the country.
Another risk arises if there is a persistent backlash and
an increase in local demand. This could be potentially leaved
to a change in the government's policies because, as I
(10:41):
previously mentioned, half of the population currently experiencing blackout conditions
and at some point the government will leave to provide
power to this segment of the population. And additionally, if
more industries require additional power, and if there are concerns
about the environmental infower of bigcoin minings and the current
(11:02):
flexibility from the government side may not be sustainable in
the future. So this scenario could lead to the situation
in Kazakhstan where lack of available partly to the imposition
of additional taxes on coin companies, which we're forced to
leave Kazakistan and to find that another locations to reside on.
Speaker 1 (11:26):
Thanks so much to Fasika, a reporter from Addis Ababa,
for your insight and your reporting there. As Fasika mentioned,
bitcoin mining is a risky gamble for both Ethiopia and
the companies alike. Is there sufficient enough energy for mining
to expand in the country and give miners that competitive
(11:48):
advantage that they're seeking, but also is it even going
to be welcomed by the public. Perhaps the only guarantee
for all parties involved is the volid utility in which
crypto continues to operate in And that's it for this week.
(12:10):
If you like the Next Africa podcast, please follow and
review it wherever you usually get your podcast. It helps
new followers find the show. I'm Jennifer Zabasaja. Thank you
so much for listening. We'll see you next week.
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