Ethiopia sticks to a halt on cryptocurrency mining permits due to maxed-out power capacity.
In a move to safeguard its national power grid and ensure energy access for households and strategic industries, Ethiopia has ceased issuing new electric power permits to cryptocurrency mining (crypto mining) companies. The decision, made by the Ethiopian government and specifically the state-owned Ethiopian Electric Power (EEP), comes as the rapidly growing energy demand from crypto mining threatened to consume up to one-third of the country's electricity supply this year.
The EEP CEO, Asheber Balcha, announced the halt on electric power supply to data mining companies. This decision was a response to the limitations of the EEP in meeting new demand, caused by the surge in interest from crypto mining firms. The halt could potentially impact the growth of cryptocurrency mining in Ethiopia.
The crypto mining sector was initially allowed as a temporary measure to earn foreign currency, generating about USD 220 million in revenue in the past fiscal year. However, it was never intended as a long-term strategy due to its unsustainable burden on the national grid. As a result, the government froze new licenses in February 2024 and is now planning to phase out existing crypto mining agreements.
Twenty-five Bitcoin mining companies currently operate in Ethiopia, with nearly 20 more on a waiting list. Most of the licensed operators, mainly foreign-owned firms backed by Chinese capital, clustered near Addis Ababa where the infrastructure is strongest. However, even this concentration is proving too demanding for the grid.
The decision has implications for cryptocurrency mining in Ethiopia. The halt to expansion of new crypto mining projects due to the freeze on permits, the gradual phase-out of existing operations as the government prioritizes domestic power needs for households and industries, and the shift in economic focus away from crypto-based revenues are among these implications. Ethiopia no longer positions itself as a crypto mining destination, reversing trends seen after other countries like China and Kazakhstan clamped down on mining.
On a positive note, power exports to Kenya and Djibouti are growing, with Kenya requesting an additional 100 megawatts. Over a 10-month period in 2024, Ethiopia generated $55 million from Bitcoin mining. The EEP exported nearly 7% of Ethiopia's generated power in the past fiscal year, earning $338 million in foreign currency.
In summary, Ethiopia’s decision reflects a balance between leveraging crypto mining for foreign exchange income and protecting critical electricity infrastructure and broader energy access for its population and economy. The halt in electric power supply to data mining companies is a step towards ensuring a reliable power supply for all Ethiopians and maintaining the country's focus on strategic industries and development.
[1] The Reporter Ethiopia. (2024). Ethiopia to halt new permits for crypto mining. Retrieved from https://www.thereporterethiopia.com/business/ethiopia-to-halt-new-permits-for-crypto-mining/
[2] Addis Fortune. (2024). Ethiopia to phase out crypto mining agreements. Retrieved from https://www.addisfortune.net/articles/ethiopia-to-phase-out-crypto-mining-agreements/
[3] The Ethiopian Herald. (2024). Ethiopia to halt expansion of crypto mining projects. Retrieved from https://www.ethiopianherald.com/articles/ethiopia-to-halt-expansion-of-crypto-mining-projects/
[4] The East African. (2024). Ethiopia halts new crypto mining permits to protect energy access. Retrieved from https://www.theeastafrican.co.ke/business/Ethiopia-halts-new-crypto-mining-permits-to-protect-energy-access/
[5] Bloomberg. (2024). Ethiopia stops issuing new permits for crypto mining. Retrieved from https://www.bloomberg.com/news/articles/2024-02-15/ethiopia-stops-issuing-new-permits-for-crypto-mining
Read also:
- Rapid Expansion in Organic Rice Protein Market Projected at 15.6% Through 2034
- Kenya broadens economic zones featuring Olkaria's geothermal energy advantage
- Nutritional Healthcare: Linking Patients with Crucial Nourishment Through Medical Professionals
- Century Lithium Announces Production of Battery-Grade Lithium Metal Anodes from Angel Island Lithium Carbonate
