Bitcoin mining operations gravitate towards Ethiopia due to affordable electric power
In a surprising turn of events, Ethiopia is making waves as one of the world's top destinations for Bitcoin mining operations. This shift is primarily due to the country's low electricity costs, with fees amounting to just 3.14 US cents per kilowatt hour.
This energy advantage is a significant factor for Bitcoin miners, who often face high operational costs, with electricity fees making up as much as 80% of the total cost. The process of mining Bitcoin involves solving complex mathematical calculations, known as Proof of Work (PoW), in a competitive race to validate transactions and add them as new blocks to the blockchain. As the Bitcoin network grows, these calculations become tougher, necessitating the use of more powerful, energy-intensive computers.
The influx of Bitcoin mining companies into Ethiopia is still in its preliminary stages, with the process of approving these operations yet to be fully established. Some companies, however, have already set up shop in the country without government licensing.
One company actively expanding its operations in Ethiopia is BIT Mining Limited, which has finalised the acquisition of two data centers in the country and is confirmed to be involved in Bitcoin mining. At present, there are no publicly reported companies in negotiations to build new Bitcoin mining operations in Ethiopia aside from BIT Mining Limited. There is also no information available on any firms operating without a license.
Interestingly, Ethiopia's state-owned energy provider, Ethiopian Electric Power (EEP), is already involved in Bitcoin mining, utilising surplus hydropower from the Grand Ethiopian Renaissance Dam to generate substantial revenues.
Out of the 21 bitcoin mining companies that have struck power deals with Ethiopia, 19 are Chinese. The Bitcoin mining landscape in Ethiopia is thus heavily influenced by Chinese companies, with potential implications for the country's energy sector and the broader global Bitcoin mining ecosystem.
As the Bitcoin network and its mining operations continue to evolve, Ethiopia's role as a top destination for Bitcoin mining is set to be a fascinating development to watch.
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