0:01

Bitcoin hasn't had the best

0:03

couple of months, but is well

0:06

up on the lows of last year, and

0:08

its cheerleaders are bullish.

0:12

I think we're seeing more long term holders. Bitcoin

0:15

has a lot of value.

0:16

We can actually expect over one hundred K

0:18

and pricing by end of year.

0:20

You can learn a lot from watching what the miners

0:22

are doing. They've been investing, They've

0:25

obviously been betting their businesses on the

0:27

price of bitcoin going up, and it looks

0:29

like they're about to win their bet.

0:31

With the renewed attention, focus has

0:33

turned to mining of the token and

0:35

the best places to do it.

0:38

In years past, many cryptocurrency

0:40

miners would have been investing in China,

0:43

but that's not an option anymore.

0:49

Minu is us shutting down they computer is.

0:51

In twenty twenty one, the Chinese government

0:53

called a crackdown on the cryptocurrency

0:56

industry.

0:56

They said their own crypto related

0:59

transaction will be considered illicit

1:01

activity.

1:02

And that's how some crypto miners left

1:05

China and moved their operations

1:07

to places like Ethiopia, a

1:10

stable economy, perfect weather

1:12

conditions, and some of the world's

1:14

lowest electricity costs. When

1:17

we talk about crypto mining. It seems

1:19

like Ethiopia has it all, but

1:22

in a country with power scarcity and

1:24

increasing climate change concerns, how

1:27

viable is this industry Already?

1:30

The government started to receive a backlash

1:32

from different people from the country,

1:34

saying supplying power to the mining

1:37

company is not right. Why half

1:39

of the population doesn't have access

1:41

to power.

1:47

I'm Jennifer's Abasaja. This is the

1:49

Next Africa podcast, bringing you

1:51

one story each week from the continent

1:53

with the context only Bloomberg can

1:55

provide. In this week's

1:57

episode, Bloomberg reporter Fasika

2:00

Tedessa speaks to us from Adis Ababab

2:03

about whether Ethiopia is really

2:05

primed to be the new crypto mining

2:07

heaven. So how did Chinese

2:09

miners set their hearts on Ethiopia.

2:12

Let's bring in Fisica Tedesa joining

2:14

us from Adis Ababa, Halfaska.

2:17

So what are the reasons behind the

2:19

shifts and why miners are now looking

2:21

to Ethiopia.

2:23

In twenty twenty two, the government has made

2:25

a change in the policy in letting

2:27

it coin mining companies to get

2:29

registered and the start operating in Ethiopia.

2:32

The second one is the ideal

2:35

or favorable climate Ethiopia has for

2:37

bitcoin mining, so basically bitcoin

2:39

mining needs five to twenty

2:42

five said, Whichitopia

2:44

has.

2:45

What are the other reasons then Pasica.

2:47

Another benefit lies in the

2:50

abundance electricity power

2:52

in Ethiopia. So currently the country

2:54

has a little over five thy two

2:56

hundred mega out of energy, so

2:59

we possibly of doubling that

3:01

capacity in the coming few years once

3:03

the Ethopian Grand Renaissance m which

3:05

is the largest in Africa, becomes

3:07

operational. The other major

3:10

factor that attracted Chinese companies to

3:12

come to Ethiopia is the low electricity

3:14

cost. Power agencies charging bitcoin

3:17

mining companies affixed rate

3:19

that at three point one for US

3:22

and s per kilo at an hour for electricity

3:25

sources from the power sub stations

3:27

connected to coin mining facilities.

3:31

And you would think it might make more sense to

3:33

operate and mine in China, but

3:36

how come they've chosen not to.

3:38

The reason given by the Chinese government was

3:41

that bitcoin mining has impacts

3:43

on the environment and also at the same time,

3:46

cryptocurrency trading can be

3:48

used for fraudulent activities and money

3:50

laundering. So because of that, Chinese

3:52

companies we're looking for a better place

3:55

to work or to operate in Pasica.

3:58

You mentioned the environment. Bigcoin

4:00

absolutely is an industry

4:03

that consumes a lot of energy.

4:05

A single ledger entry

4:07

and bitcoin consumes enough energy

4:09

to power your house for almost to day.

4:11

What's a climate crisis? Surely

4:14

being in Ethiopia, there are still

4:17

a number of environmental concerns.

4:19

So why then was Ethiopia

4:21

so willing.

4:23

The government highly leads these

4:25

companies to come to Ethiopia because

4:28

the government can directly generate

4:30

income in foreign currency. So

4:33

the other part is from

4:35

the investment perspective. Because of the

4:37

deadly war that happened in the northern

4:39

part of the country, most of the investors

4:42

lost confidence in investing in to Okay.

4:44

So these are the two major reasons that the

4:46

government is allowing companies

4:49

to come to topid despite the butlers

4:51

and the environment.

4:53

What can you tell us about the bilateral

4:55

relations between these two countries.

4:58

There must be some political elements to

5:00

this as well.

5:02

China stands as one of the major

5:05

bilateral creditors to Ethiopia, and

5:07

also Chinese companies are known

5:09

for holding the first place

5:12

in FDI or foreign investment

5:14

flows into Ethiopia, and also

5:17

several Chinese companies has held

5:19

construction of the largest dam of Ethiopia

5:22

and also they built the major railway

5:25

that Connectsopia with Dawooty. They

5:27

also built the major or the

5:29

main airport of Ethiopia. This economic

5:32

and political activity shows that there

5:34

is a strong tie between Ethiopia

5:36

and China.

5:37

So, Piska, earlier you mentioned the

5:39

dam and how China helped build

5:41

it. The four point eight billion dollars

5:43

dam, and it's one of the largest

5:45

on the continent, as you mentioned, can

5:48

you talk to us about its significance, especially

5:50

when we think about that dam in

5:52

relation to now what's happening with bitcoin

5:54

mining.

5:56

Yes, Jennifer, as you said, it's one of

5:58

the largest dums in Africa. Is the

6:00

capacity of generating five two

6:02

hundred megallards of energy. So

6:04

the government highly relies on this

6:07

term since it will help the country

6:09

to boost its power generating capacity

6:12

with the aim of exporting more

6:14

power to never in

6:16

countries including Djibouti, Sudan,

6:18

Kenya, and also they are planning

6:20

to move sell power to Tanzania.

6:23

And also not to forget that they

6:25

are signing deals with bitcoin mining

6:27

companies which require

6:29

intensive power supplies.

6:37

So how can Ethiopia grow

6:39

an industry that needs intensive

6:41

power. Well, half of its population

6:44

doesn't actually have access to electricity.

6:47

That's after the break welcome

6:56

back. Fifty percent of

6:58

the Ethiopian population and live

7:00

without electricity. So it

7:03

feels a bit contradictory to

7:05

then bring something that is power

7:08

intensive into this country.

7:11

How do you explain that?

7:12

Yeah, that's right. Basically, the government

7:15

is trying to give to justification.

7:18

One, they say that they can't generate

7:20

additional income by sailing

7:22

power to bitcoin mining companies, so that

7:25

they will build transmission

7:27

lines and enable the people that

7:29

are not connected to power to get

7:31

more power supply. So that's one of the

7:33

justification that government is giving. The

7:36

second one is they are saying that they are sailing

7:39

surplus power from the local

7:41

demand and the deal is

7:43

not impacting the domestic

7:45

power availability.

7:47

Is there any evidence that that's actually

7:49

happening, that this deal and the miners

7:52

are not actually affecting local

7:54

supply. Do we have any indications

7:56

at this point whether or not it's having an

7:58

impact? Maybe is it just too early

8:00

to tell.

8:02

Now the companies signed the power

8:04

perponse agreement with the government, a

8:06

few of them have imported the marsionaries

8:09

they will be using for mining and the

8:11

installation process, so not

8:14

many of them started operating, so it

8:16

would be hard to say the power

8:18

supply or the power demand has

8:20

been affected by this company, so

8:22

it's a bit too early.

8:24

So then Fasika, what's the benefit here

8:27

for Ethiopia? You walked us through a

8:29

lot of the different reasons as to why China

8:31

is looking to this country. But on

8:34

the contrary, what's in it for Ethiopia.

8:37

One of the significant advantages

8:39

is revenue generation from the

8:42

sale of power, so which the

8:44

country will be getting paid in dollars,

8:47

So this will help severe for

8:50

its crunching that in the economy.

8:52

Okay is exporting commodities

8:54

that is not more than three point one billion

8:56

dollars a year while the import

8:59

value is three times hired,

9:01

so this will help the country

9:03

to get more income in foreign currency.

9:06

A succession of developing countries

9:09

like Kazakhstan and others initially

9:11

embraced bitcoin mining, only to then

9:13

turn on the sector when they realized

9:16

its energy use actually threatened to fuel

9:18

discontent among its population.

9:20

I mean, is that something that could also

9:23

happen in Ethiopia.

9:25

Yes, there are risks. The first one is the

9:27

country's stability, So considering

9:30

the nature of bitcoin mining, which requires

9:33

intensive power supply and the

9:35

capital in most of the power substations are

9:37

located in CONFLICTWN areas,

9:39

so.

9:39

That's right physica. For context, it's important

9:42

to note the civil war that happened in

9:44

Ethiopia back in twenty twenty

9:47

and just how recent that was.

9:51

The conflict between the Tagrii region

9:53

and its political entity that to Grive People's

9:55

Liberation Front and the Ethiopian

9:58

government run by Prime Ministers Abby

10:00

Ahmored began on November four

10:03

after the Prime Minister accused the tpof

10:05

of attacking a federal military base.

10:08

We estimate that two point three million people

10:10

are in urgent needs of humanitarian assistance

10:12

in Tiger, including one point three million

10:15

additional people due to conflict, and.

10:18

He still was broken by the African

10:20

Union in twenty twenty two, so the

10:22

country is relatively stable

10:24

now, even though there are conflicts in

10:27

different parts of the country. Another

10:29

risk arises if there is a persistent

10:32

backlash and an increase

10:34

in local demand. This could

10:36

be potentially leaved to a change in the

10:38

government's policies because, as

10:40

I previously mentioned, half of the population

10:43

currently experiencing blackout

10:45

conditions and at some point

10:47

the government will leave to provide power to this

10:49

segment of the population. And

10:52

additionally, if more industries

10:54

require additional power, and

10:57

if there are concerns about the environmental

10:59

infower of bigcoin minings

11:01

and the current flexibility from

11:03

the government side may not be sustainable

11:06

in the future. So this scenario

11:09

could lead to the situation in

11:11

Kazakhstan where lack of available

11:13

partly to the imposition of additional taxes

11:16

on coin companies, which we're

11:18

forced to leave Kazakistan and to find that

11:20

another locations to reside

11:22

on.

11:26

Thanks so much to Fasika, a reporter

11:29

from Addis Ababa, for your insight

11:31

and your reporting there. As

11:34

Fasika mentioned, bitcoin mining

11:36

is a risky gamble for both Ethiopia

11:39

and the companies alike. Is

11:42

there sufficient enough energy for mining

11:44

to expand in the country and

11:46

give miners that competitive advantage

11:49

that they're seeking, but also

11:52

is it even going to be welcomed by the

11:54

public. Perhaps the only

11:57

guarantee for all parties involved

11:59

is the volid utility in which crypto

12:02

continues to operate in And

12:09

that's it for this week. If you like the

12:11

Next Africa podcast, please

12:13

follow and review it wherever you

12:15

usually get your podcast. It helps

12:17

new followers find the show.

12:20

I'm Jennifer Zabasaja. Thank you so much

12:23

for listening. We'll see you next week.