Ethiopia to start mining Bitcoin through new data mining partnership

The Ethiopian government is set to begin mining Bitcoin through a new partnership with Data Center Service — a subsidiary of West Data Group, according to Ethiopia-based Hashlabs Mining CEO Kal Kassa.

The partnership was announced by the country’s sovereign wealth fund, Ethiopian Investment Holdings (EIH) on Feb. 15.

Under the collaboration, the sovereign wealth fund will invest $250 million in establishing “cutting-edge infrastructure for data mining and artificial intelligence (AI) training operations in Ethiopia.”

Kassa said the deal includes setting up Bitcoin mining operations using Canaan Avalon miners and is part of the country’s broader strategy to leverage its technological and energy resources to attract international investment and foster economic growth.

However, the government has yet to confirm the news officially. EIH did not respond to a request for comment as of press time.

The news comes amid a spike in miner activity due to the impending halving, which is less than 65 days away and set to reduce mining rewards by 50%. Many miners have already begun expansion efforts to position themselves appropriately.

Changing regulatory landscape

The venture is not without its challenges and controversies, particularly concerning the energy-intensive nature of Bitcoin mining.

There’s an ongoing debate about the impact of such operations on local electricity supply, especially in a country where energy access remains a pressing issue for a significant portion of the population.

Despite these concerns, the Ethiopian government’s move towards regulating “cryptographic products,” including mining, reflects a cautious yet optimistic approach to embracing the potential economic benefits of Bitcoin mining.

This regulatory framework aims to ensure that the sector’s growth does not come at the expense of the country’s energy security or environmental commitments.

The new rules have paved the way for mining companies to set up shop in the country. Recent media reports revealed a significant increase in Chinese miners moving to the country as part of the BRICS movement.

Chinese miners

There has been a notable influx of Chinese miners in Ethiopia over the past few months, drawn by the country’s strategic initiatives and favorable conditions.

The trend is part of a larger movement that has seen Chinese Bitcoin mining operations relocate in response to regulatory pressures at home and the search for cost-effective, regulatory-friendly environments abroad.

Ethiopia’s low electricity costs, primarily due to the Grand Ethiopian Renaissance Dam, represent a primary lure for Chinese miners. This factor, coupled with the Ethiopian government’s openness to technological investments and its efforts to foster a conducive environment for high-performance computing and data mining, has made the country an attractive destination for these operations.

The dam’s role in providing affordable, renewable energy aligns with the miners’ needs for sustainable and economically viable power sources for their energy-intensive operations.

The arrival of Chinese miners is underpinned by broader geopolitical and economic considerations. China’s increasing involvement in Ethiopia, characterized by significant investments across various sectors, has established a solid foundation for such ventures.

The relationship is further reinforced by Ethiopia’s strategic importance to China as a partner in Africa, offering Chinese companies a hospitable environment for expanding their operations, including Bitcoin mining.