Ethiopia Explores Crypto Mining with New Hong Kong Data Center Deal
Ethiopia has inked a memorandum of understanding with Data Centre Service, a subsidiary of Hong Kong’s West Data, to build a $250 million data mining infrastructure project in the country.
Data centres provide the facilities to host large-scale Bitcoin mining operations. The East African nation’s latest move comes as many Chinese crypto mining operations are relocating there following a sweeping 2021 crypto crackdown by the Chinese government.
Hong Kong—a semi-autonomous region in China—has been more welcoming to crypto, but the two governments remain closely linked.
Ethiopian Investment Holdings announced the deal yesterday on LinkedIn, although the account subsequently deleted details of the deal’s value or counterparty, according to Reuters.
#Ethiopia makes data center deal with #Hong_Kong company, may start mining
The Ethiopian government has entered into a partnership with a Hong Kong data center operator. According to reports, #Bitcoin mining will be among the activities the sides develop together.
State-owned… pic.twitter.com/Q5UdLC33aW
— Addis Standard (@addisstandard) February 16, 2024
The deal also aims to promulgate AI training throughout Ethiopia.
Miners Love Ethiopia
Ethiopia started welcoming miners in 2022, although trading crypto remains prohibited. Operations setting up there can utilize reduced energy costs, an incentive that may be more alluring because of Bitcoin’s upcoming halving on April 19.
The halving refers to a quadrennial event predetermined in Bitcoin’s code when miners’ Bitcoin rewards are cut in half. This will force the largest operations to upgrade and expand their mining capacity in order to stay profitable. The ensuing global supply squeeze has historically proven to drive the price of Bitcoin.
Many miners see Ethiopia as an attractive place to set up shop because of welcoming government policies and cheaper energy costs, this is thanks to an abundance of hydroelectric power and other renewable energy sources.
The Grand Ethiopian Renaissance Dam recently increased Ethiopia’s generation capacity to 5.3 gigawatts, 92% of which comes from hydroelectric sources.
In Bloomberg last week, one senior executive at Bitmain, a leading global supplier of mining hardware, said Ethiopia may soon even rival Texas’ generation capacity in a few years with numerous electricity generation infrastructure projects underway.
Texas is the global leader in Bitcoin mining operations, accounting for 28.5% of the US’s hash rate, a measure that indicates the total computing power devoted to Bitcoin mining around the world. The US itself accounts for around 40% of global hash rate.
