Despite initial resistance, Ethiopia has started cautiously embracing the crypto sector with a mix of bold moves and calculated risks. The country that only three years ago declared cryptocurrency illegal, is now emerging as an unexpected player in the high-stakes game of Bitcoin mining.
Back in 2022, Ethiopia’s National Bank (NBE) took a hard stance against digital currencies, banning their trade across the country. But, in a move that seemed to defy its own policy, Ethiopia soon began registering crypto firms through its national cybersecurity agency, the Information Network Security Administration (INSA). The sudden U-turn hinted at something larger in the works—a strategy to harness the potential of the digital currency revolution, while keeping one foot in the regulatory door.
Unlike cryptocurrency trading, which involves buying and selling digital assets on exchanges, Bitcoin mining is an entirely different beast. Miners use powerful machines to solve complex mathematical equations that validate blockchain transactions. In return, they are rewarded with freshly minted Bitcoins. But mining is not just a digital pursuit—it is an energy-hungry process that demands vast amounts of electricity.
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By March 2024, Ethiopian Electric Power (EEP) had inked deals with 18 Bitcoin mining firms. Four of these companies were already up and running, requiring hefty amounts of electricity—between 10 MW and 100 MW for their operation. In just two months, EEP had earned USD two million in revenue from electricity sales to these crypto companies.
Among these firms is QRB Labs, a startup founded by Ethiopian entrepreneurs returning from abroad. QRB’s CEO, Nemo Semret, offers a glimpse into the technical world of Bitcoin mining, explaining that while mining can technically be done with any computer, it requires specialized hardware known as ASICs (Application-Specific Integrated Circuits). These highly efficient machines are crucial for practical mining operations. Yet, for nearly two years, Ethiopia’s import restrictions on ASICs stalled the progress of QRB Labs. After persistent lobbying and negotiation, the government finally lifted the restrictions, allowing the mining industry to gain momentum.
Ethiopia’s edge in Bitcoin mining is not just about regulations or business acumen; it is about resources. The country boasts one of the cleanest energy profiles in the world. Over 90 percent of the country’s electricity comes from hydroelectric power, with 98 percent sourced from renewables. This makes Ethiopia an attractive destination for crypto miners seeking to reduce their carbon footprint. But the country’s affordable electricity tariffs were equally compelling for miners.
Historically, electricity in Ethiopia was priced at a mere 0.6 birr/kWh (USD 0.06), a rate far below global averages.
That, however, has changed dramatically.
Starting in September 2024, the EEU began hiking rates. A client using 50 kilowatts saw their monthly bill rise from 24 birr to 41 birr by the end of 2024. By 2027, that same client could be paying as much as 92 birr per month. For Bitcoin miners, who rely on cheap power to keep their operations profitable, these price hikes could represent a significant blow. Nemo acknowledges this, noting that energy costs account for up to 60 percent of a miner’s operating expenses.
The global landscape for Bitcoin mining is fierce, and Ethiopia’s increasing electricity prices may make it harder for miners to stay competitive. In Texas, home to 35 percent of the world’s Bitcoin mining operations, the cost of electricity is about USD 0.024 per kilowatt-hour—far cheaper than Ethiopia’s new rate of around USD 0.036 per kilowatt-hour, including VAT. This 33 percent disadvantage could force miners to rethink their strategies.
In 2023, Bitcoin mining consumed 121 terawatt-hours of electricity globally—an amount comparable to Argentina’s entire annual energy usage, according to the Cambridge Centre for Alternative Finance. The industry’s heavy reliance on cheap, abundant electricity means that miners are always on the lookout for the most cost-effective energy sources. As Nemo puts it: “Location doesn’t matter as much. Bitcoin miners are always searching for the cheapest possible energy. It’s a dynamic, global industry.”
Ethiopia’s foray into Bitcoin mining has been a story of striking contrasts—ambitious potential tempered by the volatility of global markets and rising energy costs.
According to Nemo, it costs approximately USD 40,000 in electric energy per Bitcoin mined. For QRB Labs, that cost is just part of a larger picture. “In essence, we’re part of the global Bitcoin network, serving users worldwide, not just Ethiopia,” he explained, positioning Ethiopia as a vital player in the ever-growing world of digital finance.
While Bitcoin mining is not a labor-intensive industry, it does require specialized expertise. Technicians skilled in electrical engineering, computer systems administration, and software monitoring are crucial for maintaining the smooth operation of mining centers. QRB Labs has responded by launching training programs designed to equip local talent with the necessary skills to thrive in this emerging industry. Nemo acknowledged that while Bitcoin mining won’t generate hundreds of thousands of jobs, it will undoubtedly create significant foreign currency revenue and catalyze the development of Ethiopia’s electricity infrastructure.
Despite the promise of this emerging industry, the country’s Bitcoin mining space remains dominated by foreign companies, primarily from China and Europe. Local firms have yet to fully capitalize on the opportunities in the sector, although the interest is palpable.
Zerubabel Kibebe, CEO of Begize OptiMAX—a company focusing on digital transformation—sees immense potential in the Ethiopian crypto market. “Individuals who invested in Bitcoin at its lower prices have reaped substantial returns, and there’s growing interest locally,” he notes.
With Bitcoin recently surging past USD 90,000 per coin, the cryptocurrency market in Ethiopia has seen an uptick, with a single Bitcoin trading at approximately 110,835 birr.
On the horizon, a major deal looms. In a sign of Ethiopia’s increasing engagement with the crypto industry, a preliminary USD 250 million project agreement was signed between Ethiopian Investment Holdings and a subsidiary of Hong Kong-based West Data Group. This partnership marks a pivotal moment in the country’s crypto mining future.
While its price has surged past USD 90,000 per coin, Bitcoin’s value is notoriously unstable. But with such investments come risks—chief among them being the volatility of Bitcoin itself.
For example, after Donald Trump’s election as US President, the price of Bitcoin skyrocketed from USD 45,000 to USD 135,000, demonstrating just how susceptible digital currencies are to global events and political shifts.
This volatility is one of the key challenges in cryptocurrency, along with issues surrounding decentralization. One of the major attractions of Bitcoin and other cryptocurrencies is their resistance to manipulation by governments and financial institutions, offering a degree of financial independence that appeals to many. However, this same decentralized nature has its drawbacks.
“If you lose your private keys or passwords, your funds are gone forever,” said Zerubabel, an AI expert. The anonymous nature of cryptocurrency transactions also raises concerns about its potential misuse in illegal activities, such as money laundering and fraud. In fact, countries like Russia, under economic sanctions, have increasingly turned to cryptocurrency to bypass traditional financial systems.
Despite these risks, Ethiopia’s vast renewable energy resources position it as a rising leader in Bitcoin mining across Africa. The country’s ambitious infrastructure projects, such as the Grand Ethiopian Renaissance Dam (GERD), once fully operational, could provide a stable and affordable electricity supply that benefits both local communities and the cryptocurrency industry. Zerubabel believes that the GERD will be pivotal in transforming Ethiopia.
In addition to energy, there is significant potential for cryptocurrency mining to become a substantial revenue stream for the government. As the industry grows, the government could introduce regulations to tax mining companies, generating substantial income. However, this potential is not without its challenges.
Ethiopia’s Bitcoin mining industry is still in its infancy, but the country’s vast renewable energy resources offer a compelling foundation for future growth. However, as with any nascent industry, significant challenges must be overcome before the country can unlock its full potential.
One of the key hurdles, as Zerubabel points out, is Ethiopia’s power distribution limitations. While the country boasts an abundance of renewable energy, particularly from hydroelectric sources, the infrastructure needed to efficiently distribute that power remains insufficient. “We have the energy, but the distribution bottlenecks hinder miners from scaling operations,” he says. Addressing these limitations is critical to allowing the industry to flourish and position Ethiopia as a leading hub for Bitcoin mining and blockchain technology.
Nemo, CEO of QRB Labs, echoes this sentiment. His company has faced a unique set of challenges as it navigates the country’s regulatory and economic landscape. While QRB Labs earns revenue in US dollars from hosting Bitcoin mining machines, the company is subject to Ethiopia’s currency retention policy, which requires it to convert 50 percent of foreign income into the local currency, Birr. “We understand this policy,” Nemo says. “We generate our income in US dollars, but we still have to convert a significant portion into Birr, which complicates our ability to pay for electricity and other operational costs.”
While this system is manageable, he points out a significant hurdle: “We are required to pay EEP in US dollars. This is unusual because, under Ethiopian law, businesses generally transact in Birr,” he said.
For example, if QRB Labs earns USD 100 in revenue, 50 percent of that is converted into Birr, leaving only USD 50 available to pay for expenses. The company must cover a USD 60 electricity bill, with only USD 50 of that available in US dollars. “This creates an unnatural gap because, despite earning all our revenue in foreign currency.”
Electricity, which accounts for about 60 percent of QRB Labs’ operating expenses, makes this challenge even more pronounced.
Despite these, he remains optimistic about the future of QRB Labs and the broader Ethiopian Bitcoin mining industry. “We understand that these constraints are part of ongoing foreign currency reforms in Ethiopia,” he explains, expressing hope that the country’s new Startup Act—currently under discussion—will address issues like the currency retention policy. “If everything goes right, economic growth supported by electricity expansion means Bitcoin will play a role in utilizing excess energy and accelerating electrification, Nemo predicts.
Indeed, Ethiopia’s future in Bitcoin mining looks promising if it can overcome its current obstacles. “If Ethiopia captures just 2.5 percent of the global Bitcoin mining market, it could grow to 10 percent as the country’s electricity capacity expands,” Nemo adds, highlighting the immense growth potential in the sector. But whether Ethiopia can take advantage of this opportunity depends on its ability to implement effective policies, invest in infrastructure, and provide education and training for the next generation of crypto industry professionals.
The path forward is uncertain, but Ethiopia’s renewable energy resources, coupled with its strategic positioning in the heart of Africa, offer a compelling case for its role in the digital economy.
