Ethiopia Ventures into Bitcoin Mining with $250 Million Data Center Initiative

Recently, the Ethiopian Investment Holdings (EIH) inked a memorandum of understanding with Center Service PLC from Hong Kong, a subsidiary of West Data Group. This partnership signifies Ethiopia‘s entry into the lucrative bitcoin mining sector with a planned $250 million data center initiative.

With a vision to position Ethiopia as a leading data center hub in Africa, where the sector is set to grow to $5.4 billion by 2027 according to Aritzon Advisory and Intelligence, this move aims to attract foreign investments by creating cutting-edge infrastructure for data mining and artificial intelligence training purposes.

According to Kal Kassa, the CEO for Ethiopia at Hashlabs Mining, this strategic collaboration aligns with the Ethiopian Government‘s ambition to harness technology and energy resources for economic growth.

While the specifics of the bitcoin mining operations remain undisclosed by the EIH, the project’s commencement is a testament to Ethiopia’s embrace of data mining following favorable laws that permit high-performance computing activities including bitcoin mining.

Despite the country’s ban on crypto trading, Ethiopia has seen a surge of interest from miners due to its positive stance on bitcoin mining, ample hydro-based energy resources, favorable weather conditions, and cost-effective energy options.

In a recent report by Luxor Technologies, in 2023, Ethiopia ranked as the fourth preferred destination for Bitcoin mining rigs globally, following the USA, Hong Kong, and Asia. Notable establishments in the sector include a 120 MW bitcoin mining facility by Bitcluster and the construction of bitcoin mines by Hashlabs Mining to serve international clients.

Ethiopia’s energy potential, as forecasted by a Bitmain executive in a Bloomberg report, is poised to rival Texas‘ energy generation capacity, where Texas presently contributes 28.5% of the global hash rate among other Bitcoin mining hotspots.

However, concerns loom among bitcoin miners regarding potential regulatory changes in Ethiopia’s stance on mining activities. Despite the promising outlook, uncertainties persist as seen in other regions like Iran and Kazakhstan that adjusted their stance on mining due to domestic energy demands.

With a substantial portion of its population, around 40%, lacking access to electricity, Ethiopia’s surplus energy generation capabilities, including plans for the Grand Ethiopian Renaissance Dam, can potentially support both bitcoin mining operations and the country’s energy needs.

Projects like Gridless and Trojan Mining in Africa serve as inspiring benchmarks for Ethiopia to leverage its abundant green energy for bitcoin mining, potentially lighting up homes while driving economic growth.

Bitcoin mining integration into Ethiopia’s economy could contribute significantly, adding $2 to $4 billion to the GDP according to estimates from Project Mano, a collective aimed at highlighting the economic benefits of bitcoin for the nation.