Ethiopia has recently signed a memorandum of understanding with Data Centre Service, a subsidiary of Hong Kong’s West Data, to establish a $250 million data mining infrastructure project within the country.
Data centers serve as the essential facilities for hosting large-scale Bitcoin mining activities. This move by the East African nation coincides with the trend of several Chinese crypto mining enterprises relocating to Ethiopia following the comprehensive crypto crackdown by the Chinese government in 2021.
Despite Hong Kong’s status as a semi-autonomous region within China, it has displayed a more accommodating stance towards cryptocurrencies, although its relationship with the Chinese government remains closely intertwined.
The announcement of this agreement was made by Ethiopian Investment Holdings on LinkedIn, although details regarding the deal’s value or the involved party were subsequently removed from the account, as reported by Reuters.
In addition to establishing the data mining infrastructure, the deal also aims to facilitate the proliferation of AI training initiatives across Ethiopia.
Miners Love Ethiopia
In 2022, Ethiopia opened its doors to miners, despite maintaining a prohibition on crypto trading. Companies establishing operations there can take advantage of reduced energy costs, a particularly appealing prospect given the upcoming Bitcoin halving scheduled for April 19.
The halving event, encoded into Bitcoin’s system and occurring every four years, entails a halving of miners’ Bitcoin rewards. This compels major operations to enhance and expand their mining capabilities to remain profitable. Historically, this event triggers a global supply shortage, typically leading to an increase in the price of Bitcoin.
Ethiopia has become an enticing destination for miners due to its favorable government policies and lower energy expenses, primarily attributed to its abundance of hydroelectric and other renewable energy sources. The recent completion of the Grand Ethiopian Renaissance Dam has boosted the country’s generation capacity to 5.3 gigawatts, with 92% of it originating from hydroelectric sources.
According to a recent report by Bloomberg, a senior executive at Bitmain, a leading supplier of mining hardware, suggested that Ethiopia could soon rival Texas in terms of electricity generation capacity within a few years, given the numerous energy infrastructure projects currently underway.
Texas presently leads globally in Bitcoin mining operations, accounting for 28.5% of the United States’ hash rate, a metric representing the total computing power dedicated to Bitcoin mining worldwide. The United States itself contributes approximately 40% to the global hash rate.
