Chinese miners were not welcome in their homeland, so they decided to move to Africa. However, not everything is going smoothly with regulation in the region. Digital asset miners from China are actively moving to Ethiopia. In addition to cheap electricity, miners are also attracted by friendly politicians, according to reports.
Will Ethiopia Become a Crypto Mining Hub for The Chinese?
Low electricity costs and a friendly government that will allow mining in 2022 have turned Ethiopia into an island of hope for Chinese Bitcoin (BTC) miners. The latter were banned from carrying out their activities in their homeland in 2021. Because of the restrictions, once-dominant miners from China are now struggling to compete with their Texas counterparts.
According to Ethan Vera, chief operating officer of Luxor Technology, Ethiopia has already become one of the world’s largest recipients of mining equipment. Luxor concluded its first major supply deals in September last year. Almost all of these deals are with Chinese partners.
However, moving to an African country is not without risks. Thus, according to data for 2016, more than half of Ethiopia is not supplied with electricity. To date, the situation has remained virtually unchanged. Additionally, according to industry executives cited by Bloomberg, Ethiopian officials are wary of the controversy that surrounds BTC mining.
Ideal Climate, But Not Ideal Regulations
BWP General Director Vitaly Borshenko noted that Ethiopia’s advantages are not limited to cheap electricity. One of the main features is the ideal temperature for miners, which ranges from 5 to 25 degrees. There are regulatory uncertainties in the country. Thus, industry representatives had to fight for several years to legalize mining activities. However, companies have not yet received all the licenses they need to operate.
“Ethiopia is highly regulated. Introducing a new sector like this has been a big challenge and we have been working for the past two years to obtain all the necessary approvals from the government,” said Nemo Semret, CEO of local miner QRB Labs. Some experts note that Ethiopia allowed mining only because companies pay for the electricity they consume in foreign currency. This way the authorities get more profit. However, what will happen in the long term remains uncertain, Semret added.
Chinese Crypto Miners Don’t Care
At the same time, Chinese miners do not even wait for any permits before starting their activities. According to a representative of the China Digital Mining Association, many are starting to work under the guise of agricultural companies.
“Chinese miners have no problems building sites in Africa. It’s like another province of China,” he commented. Thus, they gain access to electricity without government permission to mine cryptocurrencies. This week it became known that Beijing plans to tighten control over miners. The authorities want to strengthen monitoring and analysis of the industry in order to stop absolutely all prohibited activities.
