Nigeria, South Africa, and Kenya are famous top dogs in Africa's cryptocurrency wave. While this spotlight is well-deserved, it asks what developments are occurring in other parts of the continent regarding cryptocurrency and Web 3. An exciting discovery I made in my research is Ethiopia's approval of Bitcoin as a legal tender.

This move puts Ethiopia right up there with the Central African Republic (C.A.R.), the first country to do so. Besides being #2, legalizing Bitcoin sits the Horn of Africa at the same table with Africa's Web 3 giants. As of writing, Ethiopia ranks #7 on the list of highest crypto holders in Africa, with over 1.8 million people actively trading Bitcoin.

But why is Ethiopia's crypto industry in the news again in 2024?

The answer is connected to the recent buzz as companies eye the country's potential as a hub for affordable bitcoin mining. In light of this, Ethiopia is gearing up to experience a surge in mining activities. This article summarizes every detail you need to know. For starters, bitcoin mining is known for exceptionally high energy consumption, a factor that has been a primary source of concern for environmentalists and climate activists. However, despite initial misgivings from officials regarding the associated risks, the allure of earning foreign currency has prompted a welcoming stance towards these mining ventures.

According to a recent Bloomberg report, Ethiopia's state-controlled power regulation agency has sealed power agreements with 21 bitcoin mining firms, mostly Chinese-based. These companies, seeking affordable electricity following China's ban on Bitcoin mining, have found a favorable environment in Ethiopia, where energy costs are as low as 3.14 US cents per kilowatt hour.

While Ethiopian authorities harbor apprehensions about bitcoin mining controversies, the promise of acquiring much-needed U.S. dollars has overshadowed these reservations. Yodahe Zemichael, deputy director of Ethiopia's Information Network Security Administration, revealed that the approval process for these mining entities is still underway. However,Bloomberg's investigation uncovered that some companies have commenced operations without awaiting government authorization.

For readers new to the concept, Bitcoin mining entails miners competing to solve intricate mathematical calculations in a process known as Proof of Work (PoW). The first miner to crack the code validates transactions and is rewarded with bitcoins, fueling the circulation of new coins. As the network expands, miners invest in robust, energy-intensive computers to stay competitive.

Electricity costs constitute a significant portion of a mine's operational expenses, driving miners to seek locations with inexpensive electricity and lenient regulations. However, bitcoin mining's substantial energy consumption has drawn criticism, with its environmental impact under scrutiny.

Despite environmental concerns, a K.P.M.G. report has mitigated the controversies surrounding Bitcoin mining, asserting that its energy requirements are lower than widely believed. Nevertheless, Ethiopia's economy, grappling with depleted foreign exchange reserves, views bitcoin mining as a viable avenue to bolster its USD reserves, especially amidst financial challenges and seeking assistance from international organizations like the I.M.F.