- EIH and West Data Group just signed an MOU to put up a national Bitcoin (BTC) mining project in Ethiopia.
- This involves a $250 million venture that could rival Texas in hashrate.
- Bitcoin mining could boost the nation’s GDP by $2 billion to $4 billion.
The National Bitcoin Mining Project of Ethiopia
Ethiopia is gearing up to become the first country in the African continent to establish a national Bitcoin mining project. This comes after Ethiopian Investment Holdings (EIH), the country’s investment arm, inked a memorandum of understanding (MOU) with West Data Group, a Hong Kong FinTech firm powered by blockchain.
The general agreement involves a $250 million venture classified as a “data mining project” operated by the parties. According to Forbes, it is “dedicated to establishing cutting-edge infrastructure for data mining and artificial intelligence training operations in Ethiopia.”
Meanwhile, Hashlabs Mining CEO Kal Kassa remarked “The development is part of the Ethiopian Government’s aim to drive economic growth by leveraging technology and energy sources to attract foreign investments.”
The partnership aligns with the nation’s goal of strategically positioning itself as a data hub in the African continent. Based on estimates, the sector is expected to soar by $5.4 billion three years from now.
Ethiopia currently ranks fourth in Luxor Technologies’ list of top Bitcoin mining destinations globally. Citing a Bitmain senior executive’s projection, the nation has the potential to trump Texas’ mining capacity, which makes up 28.5% of the 40% global hashrate owned by the US. Now operating in the country are Bitcluster and Hashlabs Mining.
Concerns Raised by Critics
There are, however, some concerns about the limited energy production in Ethiopia where around 120 million or 40% of its population still have no access to electricity. This is despite the installation of over 5,000 MW facility and another 5,150 MW hydroelectric plant coming up from the Grand Ethiopia Renaissance Dam (GERD).
Bitcoin miners also face the uncertainty of future regulations in the country. To date, it enforces a ban on cryptocurrency trading but has ratified laws allowing “high-performance computing” and “data mining. The latter is the category where Bitcoin mining operations fall.
Nevertheless, there are no fixed or clear-cut rules specifically addressing BTC mining in Ethiopia. Investors fear that it might shift its stance once these entities start competing with local energy demand as shown in the cases of Iran and Kazakhstan.
EIH is yet to comment on the framework of its planned Bitcoin mining operations. Nonetheless, it’s expected to follow the lead of similar projects in Africa that tap into renewable green energy as sources.
From there, any excess energy is redirected to the energy demand of communities. Likewise, the contribution of these projects to the gross domestic product (GDP) of the nation can be used to improve the economy as well as the quality of life of its citizens through the enhancement of basic education, technical training, and other livelihood missions.
Project Mano estimates that Bitcoin mining could potentially contribute $2 billion to $4 billion in Ethiopia’s GDP.