- Chinese mining companies have entered into an agreement with the energy monopoly of Ethiopia.
- They are attracted by low electricity tariffs, moderate climate and friendly relations with this country.
- The uncertain political situation in Ethiopia poses potential risks, says a Bloomberg report.
Low electricity tariffs and friendly relations with China have made Ethiopia one of the best countries for Chinese miners. This is stated in the Bloomberg report.
Ethiopia, like China, prohibits trading in cryptocurrencies. However, in 2022 the country legalized mining. Companies from China, which are looking for new sites for mining farms, are actively investing in the African country, according to the publication.
The source claims that 19 of the 21 firms that have entered into agreements with the Ethiopian energy monopoly are Chinese. First of all, they are attracted by affordable electricity tariffs, 92% of which is generated by hydroelectric power plants.
In addition, the African country has a temperate climate. For comparison, in Texas, one of the largest mining centers in the United States, summer temperatures rise above +30 °C. Such weather conditions make it more expensive to cool equipment, the report said.
Meanwhile, nearly half of Ethiopians live without access to electricity. Industry leaders say they fear disagreements with the government as mining becomes a “sensitive topic.” On the other hand, Bitcoin mining opens up new opportunities for the influx of investment into the country.
“In terms of risks, the country could exhaust all available electricity, leaving no room for Bitcoin miners to expand. Secondly, the government may consider such companies undesirable. Then they will have to pack up and leave,” said Hashlabs Mining chief executive Jaran Mellerud.
In addition to this, several years ago there was a civil war in Ethiopia. According to the report, political tensions persist in the country, making investing riskier.
We previously reported that China introduced new restrictions for mining companies. Meanwhile, the Texas Blockchain Council (TBC) accused US authorities of trying to “restrict or eliminate” cryptocurrency mining.