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Outcast Chinese Bitcoin Miners Migrate to Africa to Capitalize on Cheap Electricity

2 mins
Updated by Kyle Baird
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In Brief

  • Chinese Bitcoin miners flock to Ethiopia for cheap power from the Grand Renaissance Dam, despite local electricity scarcity.
  • Ethiopia emerges as a new hub for Bitcoin mining, attracting miners with low energy costs and government cooperation.
  • After China's ban, miners shifted to Kazakhstan, but faced energy strains and regulatory challenges, leading to industry decline.
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Chinese Bitcoin miners, ousted from their homeland, are now setting their sights on Africa, notably Ethiopia. This migration is driven by the lure of cheap electricity.

The Grand Ethiopian Renaissance Dam, Africa’s largest, stands at the heart of this new trend.

Will Ethiopia Become a Haven for Bitcoin Miners?

Ethiopia’s low electricity costs, some of the lowest globally, coupled with a government increasingly open to Bitcoin mining, have made it an attractive destination for these Chinese companies.

Ethan Vera, Chief Operations Officer at Luxor Technology, commented on the situation:

“Ethiopia offers a unique combination of affordable power and a government that is welcoming Bitcoin mining”

This move, however, is not without its risks. According to data from 2016, around 56% of Ethiopia had no access to electricity.

African countries by percentage of population with no access to electricity (2016). Source: ResearchGate
African countries by percentage of population with no access to electricity (2016). Source: ResearchGate

Things are slowly getting better, however. But even now, in 2024, nearly half of Ethiopia’s population still lives without electricity. This has created a delicate balance between embracing this lucrative sector and addressing domestic energy needs.

This trend in Ethiopia is reminiscent of what transpired in Kazakhstan following China’s 2021 ban on Bitcoin mining.

The Rise and Fall of Kazakhstan Bitcoin Mining

After China banned Bitcoin mining in May 2021, Kazakhstan initially saw a surge in miners migrating to the country. This was mostly due to its close proximity, abundant energy resources, and favorable regulatory environment.

However, the industry’s rapid growth led to power shortages and regulatory challenges, causing a significant decline.

At the time, Hashlabs co-founder Alen Makhmetov explained:

“The situation in Kazakhstan serves as a cautionary example of the delicate balance required in hosting large-scale Bitcoin mining operations.”

Read more: How To Mine Cryptocurrency: A Step-by-Step Guide

As Chinese miners navigate the complexities of establishing operations in Ethiopia, they find themselves in a geopolitically advantageous position. China, as Ethiopia’s largest source of foreign investment, has lent substantial support for various projects in the country. This relationship and Ethiopia’s need for foreign currency inflows set the stage for a potentially symbiotic relationship.

However, the global Bitcoin mining sector continues to evolve under the influence of various factors, including geopolitical dynamics, environmental concerns, and the quest for sustainable energy sources.

As Chinese miners embark on this new venture in Ethiopia, the lessons from Kazakhstan’s experience loom large, highlighting the need for a careful approach that balances industry growth with broader economic and environmental considerations.

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Kyle Baird
Kyle migrated from the East Coast USA to South-East Asia after graduating from Pennsylvania's East Stroudsburg University with a Bachelor of Science degree in 2010. Following in the footsteps of his grandfather, Kyle got his start buying stocks and precious metals in his teens. This sparked his interest in learning and writing about cryptocurrencies. He started as a copywriter for Bitcoinist in 2016 before taking on an editor's role at BeInCrypto at the beginning of 2018.