Ethiopia's cheap and abundant electricity has made it an attractive destination for Bitcoin miners, mostly from China. As Chinese miners were forced to relocate following a ban on Bitcoin mining in their home country, they have found a new home in Ethiopia, according to a recent Bloomberg report.

Although, cryptocurrency trading is banned in Ethiopia, the country started allowing Bitcoin mining in 2022. To support the mining industry, the Ethiopian government collaborated with Chinese investors to construct the Grand Ethiopian Renaissance Dam (GERD), a $4.8 billion project. Once completed in 2024, the dam will be capable of generating up to 5,150 megawatts of electricity, providing power to the mining operations.

Ethiopia's strong ties with China over the past decade have played a significant role in attracting Bitcoin miners. Chinese companies have been instrumental in the construction of the GERD, which will serve as the power source for the miners. However, the country faces the challenge of balancing the potential economic benefits of mining with the fact that nearly 70% of its population currently lives without electricity, as reported by the World Bank.

The GERD project, which significantly increased Ethiopia's installed generation capacity to 5.3 gigawatts, is primarily reliant on hydropower, a renewable energy source. The Ethiopian Electric Power charges Bitcoin miners a fixed rate of 3.14 US cents per kilowatt hour for the electricity drawn from substations.

CEO Vitaliy Borshenko highlighted that Ethiopia offers advantages beyond cheap and renewable power. The country's average temperature ranging from 5 to 25 degrees Celsius (41F-77F) aligns perfectly with the ideal mining conditions recommended by rig maker Bitmain. Additionally, Addis Ababa's elevation of almost 2,400 meters above sea level provides a cooler environment for mining compared to other locations.

Interestingly, it's not only Chinese miners who are transitioning their Bitcoin mining operations to Ethiopia. Russian Bitcoin mining solutions provider, BitСluster, plans to establish a 120-megawatt data center in Addis Ababa. Scheduled to go live this year at the Kilinto high-voltage substation, the facility will be powered entirely by renewable energy sources, specifically obtained from the Grand Ethiopian Renaissance Dam.

Co-founder of BitCluster, Sergey Arestov, predicted that "Ethiopia, with its hydropower potential, will undoubtedly emerge as a new global mining hot spot."

As Ethiopia continues to strengthen its ties with China and attract investments from various mining companies, the Bitcoin hub of Africa seems poised for further expansion. With the completion of the GERD and the availability of affordable renewable energy, Ethiopia presents a compelling proposition for miners seeking a favorable environment for their operations.

In the coming years, it will be intriguing to witness how Ethiopia navigates the delicate balance between advancing its mining industry and addressing the electricity needs of its population. As the Bitcoin hub of Africa, the country has the potential to leverage its natural resources and strategic partnerships to become a trailblazer in the lucrative Bitcoin mining industry.

While challenges remain, the rise of Ethiopia as a prominent player in the Bitcoin mining landscape signals a promising future for the country's economy and its position within the global crypto community. As more miners flock to this East African nation, Ethiopia's journey towards becoming a leading hub for digital currency mining is well underway.

Image: Grand Ethiopian Renaissance Dam (GERD)