Ethiopia already has more capacity than some of the largest mining data centers in LATAM. Bitcoin mining in Ethiopia is legal, but BTC trading is not allowed. In a negative context for the profitability of bitcoin (BTC) mining that affects Europe and Latin America, the search for cheap energy to carry out this industry is pushing many miners to Africa, especially Ethiopia. The combination of abundant hydropower, a cool climate in some regions, altitude, and land availability make Ethiopia an attractive location for bitcoin mining. The African country reached 600 megawatts (MW) of operational bitcoin miners. In addition, this activity has the support of the state electricity supply company Ethiopian Electric Power (EEP), as detailed by Ethan Vera, co-founder and director of operations of the Luxor mining company, on October 8, 2024. Vera expressed that, Added to the 600 MW, miners in Ethiopia “are expected to activate several hundred more MW this year.”
Ethiopia could compete with South American countries
The miners are seen forced to find regions where operating costs are more affordable and thus counteract the decrease in profits that occurred this year. In the context of bitcoin and cryptocurrency mining, the figure of 600 MW gives an idea of the scale of the mining operation in Ethiopia, although it does not provide precise information on energy consumption in a specific period. To approximate a notion of the magnitude of what is happening in Ethiopia, a comparison with what is happening in some South American countries is fair. For example, in Brazil, the Penguin Group company agreed with this country in July 2024 on an energy contract for 400 MW to supply its operations centers, with the possibility of expanding it to another 400 MW. In Paraguay, on July 23, 2024, Canadian bitcoin mining company Hive Digital Technologies announced the construction of a 100 MW mining site. In Argentina, in the first week of July 2024, a bitcoin mining project promoted by the companies Zapala Mining and Patagonia 360 located in the Patagonia region, in the south of the country, became known. In this case, the project will be divided into three stages. The initial phase will begin with a capacity of 8 MW in October this year. Then, it is planned that the power will be increased to 100 MW in 2025, and subsequently reach 200 MW by 2026. In Venezuela, which used to be a powerhouse in bitcoin mining in South America, this condition was harmed after the announcement in mid May of the government of disconnect all BTC mining farms from their national electrical system. The argument explained by the authorities for disconnecting them was high energy consumption that led to power failures in places close to the mining facilities. Here it would be valid to highlight that these examples presented deal with individual projects, while the information given by Vera conglomerates the current capacity of 600 MW corresponding to all of Ethiopia, which shows significant growth in the region. On the other hand, in February 2024, BitcoinDynamic reported that many Chinese miners who were expelled After the prohibition of this activity in their country, they settled in Ethiopia. The miners were seduced by the construction of the largest water dam in Africa, which has an installed capacity of 6,450 MW, and by the price of electricity in Ethiopia, which is around USD 0.06 kW/h, being one of the lowest in the world. In this way, BTC miners in Ethiopia can access a dedicated capacity of 600 MW with one of the lowest operating costs in the world, could push this country to become an advantageous site for bitcoin extraction compared to other countries. .
Ethiopia's cold climate: another advantage
In addition, the manager explained that these miners would also be taking advantage of the cold climate of Ethiopia for most of the year. Since mining equipment emits a lot of heat, it is advantageous to install it in locations where the heat can dissipate naturally into the environment. This leads to a reduction in the need for artificial cooling systems, energy consumption and operating costs. Additionally, high temperatures can negatively affect performance of mining equipment, reducing its processing speed and, therefore, its ability to generate new bitcoins. In a colder environment, equipment can operate at an optimal temperature, resulting in greater efficiency and higher profits. For the hot months (February to May), miners use an evaporative and “water wall” cooling system. This mechanism consists of water evaporates, absorbing heat from the environment. As the water evaporates, the surrounding air cools. In the case of «water walls», wet panels or walls are created through which the hot air generated by mining equipment circulates. As air passes through these wet walls, some of the water evaporates, absorbing heat and cooling the air. Ultimately, Vera said that the most used models in Ethiopian farms are the Antminer S19J Pro and the Avalon A1346, which have a hashrate capacity of approximately 100 TH/s (terahashes per second) per unit.
Bitcoin mining equipment at a facility in Ethiopia. Source: X. In this way, the conditions that these miners find in Ethiopia position this African country as an emerging actor that helps alleviate the current difficulties of mining in other regions.