Ethiopia, a country landlocked between six neighbors in the Horn of Africa, is home to approximately 120 million people, making it the second most populous nation on the continent. With a GDP of $163 billion, Ethiopia is on par economically with countries like Ukraine, Morocco, Slovakia, and Kuwait.
Despite facing a bloody civil war with some regions still under the control of anti-government forces like the Amhara militia Fano, Chinese bitcoin mining company BIT Mining (BTCM) has decided to expand its operations into Ethiopia. In a $14 million deal, BIT Mining acquired facilities with a capacity of 51 megawatts and nearly 18,000 bitcoin mining rigs in the country.
One of the main reasons for choosing Ethiopia is its ultra-low electricity costs, which provide BIT Mining with an opportunity to extend the lifespan of its bitcoin mining rigs. In the U.S., where the company was previously based, electricity costs are significantly higher, leading to the faster obsolescence of mining rigs. By moving older generation machines to Ethiopia, BIT Mining can maximize their efficiency and profitability.
BIT Mining primarily operates in the hosting business, offering mining facilities for various clients. By utilizing Ethiopia’s lower electricity costs, the company can attract more investors and generate higher returns on their mining rigs. This strategy creates a positive feedback loop that benefits both BIT Mining and its clients.
Ethiopia’s electric standards, similar to China’s, allow BIT Mining to leverage its engineering expertise and repurpose electric equipment previously used in China before the bitcoin mining ban. Additionally, Ethiopia has abundant hydroelectric power, partly due to Chinese investments in projects like the Grand Ethiopian Renaissance Dam, which will be the largest dam in Africa once completed.
Despite political and social unrest in Ethiopia, the government has been supportive of the mining industry. With 1.5% of Bitcoin’s total hashrate coming from Ethiopia, the country plays a significant role in the cryptocurrency network. BIT Mining, after thorough research and visits to Ethiopia, decided to purchase existing facilities to mitigate potential risks.
While challenges exist in convincing employees to relocate from the U.S. or China to Ethiopia, BIT Mining is optimistic about the country’s opportunities. The company is exploring investments in energy infrastructure, AI data centers, and additional bitcoin mining facilities in Ethiopia. With a focus on capital-intensive projects, BIT Mining sees Ethiopia as a promising environment for growth and innovation.