1 00:00:01,840 --> 00:00:05,840 Speaker 1: Bitcoin hasn't had the best couple of months, but is 2 00:00:05,960 --> 00:00:08,799 Speaker 1: well up on the lows of last year, and its 3 00:00:08,880 --> 00:00:12,480 Speaker 1: cheerleaders are bullish. 4 00:00:12,520 --> 00:00:15,160 Speaker 2: I think we're seeing more long term holders. Bitcoin has 5 00:00:15,200 --> 00:00:16,320 Speaker 2: a lot of value. 6 00:00:16,560 --> 00:00:19,239 Speaker 1: We can actually expect over one hundred K and pricing 7 00:00:19,280 --> 00:00:19,960 Speaker 1: by end of year. 8 00:00:20,440 --> 00:00:22,880 Speaker 3: You can learn a lot from watching what the miners 9 00:00:22,880 --> 00:00:26,120 Speaker 3: are doing. They've been investing, They've obviously been betting their 10 00:00:26,160 --> 00:00:28,560 Speaker 3: businesses on the price of bitcoin going up, and it 11 00:00:28,800 --> 00:00:30,720 Speaker 3: looks like they're about to win their bet. 12 00:00:31,040 --> 00:00:34,479 Speaker 1: With the renewed attention, focus has turned to mining of 13 00:00:34,479 --> 00:00:38,320 Speaker 1: the token and the best places to do it. In 14 00:00:38,440 --> 00:00:43,480 Speaker 1: years past, many cryptocurrency miners would have been investing in China, 15 00:00:43,600 --> 00:00:45,120 Speaker 1: but that's not an option anymore. 16 00:00:49,159 --> 00:00:51,320 Speaker 3: Minu is us shutting down they computer is. 17 00:00:51,640 --> 00:00:55,040 Speaker 1: In twenty twenty one, the Chinese government called a crackdown 18 00:00:55,120 --> 00:00:56,680 Speaker 1: on the cryptocurrency industry. 19 00:00:56,920 --> 00:01:01,080 Speaker 3: They said their own crypto related transaction will be considered 20 00:01:01,160 --> 00:01:03,040 Speaker 3: illicit activity. 21 00:01:02,800 --> 00:01:06,160 Speaker 1: And that's how some crypto miners left China and moved 22 00:01:06,200 --> 00:01:12,360 Speaker 1: their operations to places like Ethiopia, a stable economy, perfect 23 00:01:12,440 --> 00:01:16,839 Speaker 1: weather conditions, and some of the world's lowest electricity costs. 24 00:01:17,200 --> 00:01:20,520 Speaker 1: When we talk about crypto mining. It seems like Ethiopia 25 00:01:20,800 --> 00:01:24,160 Speaker 1: has it all, but in a country with power scarcity 26 00:01:24,400 --> 00:01:30,080 Speaker 1: and increasing climate change concerns, how viable is this industry Already? 27 00:01:30,160 --> 00:01:33,880 Speaker 2: The government started to receive a backlash from different people 28 00:01:34,000 --> 00:01:37,440 Speaker 2: from the country, saying supplying power to the mining company 29 00:01:38,040 --> 00:01:41,160 Speaker 2: is not right. Why half of the population doesn't have 30 00:01:41,440 --> 00:01:42,320 Speaker 2: access to power. 31 00:01:47,080 --> 00:01:51,080 Speaker 1: I'm Jennifer's Abasaja. This is the Next Africa podcast, bringing 32 00:01:51,080 --> 00:01:53,800 Speaker 1: you one story each week from the continent with the 33 00:01:53,840 --> 00:01:59,120 Speaker 1: context only Bloomberg can provide. In this week's episode, Bloomberg 34 00:01:59,120 --> 00:02:03,360 Speaker 1: reporter Fasika Tedessa speaks to us from Adis Ababab about 35 00:02:03,360 --> 00:02:07,200 Speaker 1: whether Ethiopia is really primed to be the new crypto 36 00:02:07,280 --> 00:02:11,000 Speaker 1: mining heaven. So how did Chinese miners set their hearts 37 00:02:11,120 --> 00:02:15,120 Speaker 1: on Ethiopia. Let's bring in Fisica Tedesa joining us from 38 00:02:15,240 --> 00:02:19,400 Speaker 1: Adis Ababa, Halfaska. So what are the reasons behind the 39 00:02:19,480 --> 00:02:22,359 Speaker 1: shifts and why miners are now looking to Ethiopia. 40 00:02:23,000 --> 00:02:25,640 Speaker 2: In twenty twenty two, the government has made a change 41 00:02:25,680 --> 00:02:29,080 Speaker 2: in the policy in letting it coin mining companies to 42 00:02:29,240 --> 00:02:33,160 Speaker 2: get registered and the start operating in Ethiopia. The second 43 00:02:33,160 --> 00:02:37,200 Speaker 2: one is the ideal or favorable climate Ethiopia has for 44 00:02:37,280 --> 00:02:42,000 Speaker 2: bitcoin mining, so basically bitcoin mining needs five to twenty 45 00:02:42,040 --> 00:02:44,880 Speaker 2: five said, Whichitopia has. 46 00:02:45,440 --> 00:02:47,160 Speaker 1: What are the other reasons then Pasica. 47 00:02:47,880 --> 00:02:52,760 Speaker 2: Another benefit lies in the abundance electricity power in Ethiopia. 48 00:02:52,960 --> 00:02:56,320 Speaker 2: So currently the country has a little over five thy 49 00:02:56,400 --> 00:03:00,280 Speaker 2: two hundred mega out of energy, so we possibly of 50 00:03:00,560 --> 00:03:03,640 Speaker 2: doubling that capacity in the coming few years once the 51 00:03:03,680 --> 00:03:07,400 Speaker 2: Ethopian Grand Renaissance m which is the largest in Africa, 52 00:03:07,520 --> 00:03:12,080 Speaker 2: becomes operational. The other major factor that attracted Chinese companies 53 00:03:12,120 --> 00:03:15,640 Speaker 2: to come to Ethiopia is the low electricity cost. Power 54 00:03:15,639 --> 00:03:20,720 Speaker 2: agencies charging bitcoin mining companies affixed rate that at three 55 00:03:20,760 --> 00:03:23,800 Speaker 2: point one for US and s per kilo at an 56 00:03:23,800 --> 00:03:28,440 Speaker 2: hour for electricity sources from the power sub stations connected 57 00:03:28,480 --> 00:03:31,320 Speaker 2: to coin mining facilities. 58 00:03:31,560 --> 00:03:33,680 Speaker 1: And you would think it might make more sense to 59 00:03:33,760 --> 00:03:37,720 Speaker 1: operate and mine in China, but how come they've chosen 60 00:03:37,760 --> 00:03:38,040 Speaker 1: not to. 61 00:03:38,760 --> 00:03:41,920 Speaker 2: The reason given by the Chinese government was that bitcoin 62 00:03:42,000 --> 00:03:45,160 Speaker 2: mining has impacts on the environment and also at the 63 00:03:45,160 --> 00:03:50,120 Speaker 2: same time, cryptocurrency trading can be used for fraudulent activities 64 00:03:50,120 --> 00:03:53,360 Speaker 2: and money laundering. So because of that, Chinese companies we're 65 00:03:53,400 --> 00:03:56,720 Speaker 2: looking for a better place to work or to operate 66 00:03:56,760 --> 00:03:58,240 Speaker 2: in Pasica. 67 00:03:58,320 --> 00:04:03,360 Speaker 1: You mentioned the environment. Bigcoin absolutely is an industry that 68 00:04:03,400 --> 00:04:04,840 Speaker 1: consumes a lot of energy. 69 00:04:05,400 --> 00:04:09,640 Speaker 3: A single ledger entry and bitcoin consumes enough energy to 70 00:04:09,720 --> 00:04:11,240 Speaker 3: power your house for almost to day. 71 00:04:11,680 --> 00:04:16,360 Speaker 1: What's a climate crisis? Surely being in Ethiopia, there are 72 00:04:16,480 --> 00:04:20,640 Speaker 1: still a number of environmental concerns. So why then was 73 00:04:20,720 --> 00:04:21,960 Speaker 1: Ethiopia so willing. 74 00:04:23,080 --> 00:04:27,000 Speaker 2: The government highly leads these companies to come to Ethiopia 75 00:04:27,600 --> 00:04:32,200 Speaker 2: because the government can directly generate income in foreign currency. 76 00:04:32,839 --> 00:04:37,040 Speaker 2: So the other part is from the investment perspective. Because 77 00:04:37,040 --> 00:04:39,760 Speaker 2: of the deadly war that happened in the northern part 78 00:04:39,839 --> 00:04:43,320 Speaker 2: of the country, most of the investors lost confidence in 79 00:04:43,320 --> 00:04:45,599 Speaker 2: investing in to Okay. So these are the two major 80 00:04:45,680 --> 00:04:49,360 Speaker 2: reasons that the government is allowing companies to come to 81 00:04:49,520 --> 00:04:51,880 Speaker 2: topid despite the butlers and the environment. 82 00:04:53,080 --> 00:04:56,960 Speaker 1: What can you tell us about the bilateral relations between 83 00:04:57,160 --> 00:05:00,680 Speaker 1: these two countries. There must be some political elements to 84 00:05:00,760 --> 00:05:01,480 Speaker 1: this as well. 85 00:05:02,839 --> 00:05:07,120 Speaker 2: China stands as one of the major bilateral creditors to Ethiopia, 86 00:05:07,480 --> 00:05:11,560 Speaker 2: and also Chinese companies are known for holding the first 87 00:05:11,839 --> 00:05:16,720 Speaker 2: place in FDI or foreign investment flows into Ethiopia, and 88 00:05:16,800 --> 00:05:20,840 Speaker 2: also several Chinese companies has held construction of the largest 89 00:05:20,920 --> 00:05:24,799 Speaker 2: dam of Ethiopia and also they built the major railway 90 00:05:25,040 --> 00:05:29,719 Speaker 2: that Connectsopia with Dawooty. They also built the major or 91 00:05:29,760 --> 00:05:33,560 Speaker 2: the main airport of Ethiopia. This economic and political activity 92 00:05:33,720 --> 00:05:37,440 Speaker 2: shows that there is a strong tie between Ethiopia and China. 93 00:05:37,520 --> 00:05:41,040 Speaker 1: So, Piska, earlier you mentioned the dam and how China 94 00:05:41,120 --> 00:05:44,280 Speaker 1: helped build it. The four point eight billion dollars dam, 95 00:05:44,680 --> 00:05:47,040 Speaker 1: and it's one of the largest on the continent, as 96 00:05:47,040 --> 00:05:49,800 Speaker 1: you mentioned, can you talk to us about its significance, 97 00:05:50,000 --> 00:05:53,320 Speaker 1: especially when we think about that dam in relation to 98 00:05:53,440 --> 00:05:55,240 Speaker 1: now what's happening with bitcoin mining. 99 00:05:56,080 --> 00:05:58,680 Speaker 2: Yes, Jennifer, as you said, it's one of the largest 100 00:05:58,760 --> 00:06:02,400 Speaker 2: dums in Africa. Is the capacity of generating five two 101 00:06:02,480 --> 00:06:06,600 Speaker 2: hundred megallards of energy. So the government highly relies on 102 00:06:07,040 --> 00:06:09,920 Speaker 2: this term since it will help the country to boost 103 00:06:09,960 --> 00:06:14,160 Speaker 2: its power generating capacity with the aim of exporting more 104 00:06:14,240 --> 00:06:19,760 Speaker 2: power to never in countries including Djibouti, Sudan, Kenya, and 105 00:06:19,800 --> 00:06:23,080 Speaker 2: also they are planning to move sell power to Tanzania. 106 00:06:23,120 --> 00:06:26,120 Speaker 2: And also not to forget that they are signing deals 107 00:06:26,120 --> 00:06:31,200 Speaker 2: with bitcoin mining companies which require intensive power supplies. 108 00:06:37,520 --> 00:06:42,760 Speaker 1: So how can Ethiopia grow an industry that needs intensive power. Well, 109 00:06:42,800 --> 00:06:46,599 Speaker 1: half of its population doesn't actually have access to electricity. 110 00:06:47,279 --> 00:06:58,640 Speaker 1: That's after the break welcome back. Fifty percent of the 111 00:06:58,720 --> 00:07:03,599 Speaker 1: Ethiopian population and live without electricity. So it feels a 112 00:07:03,680 --> 00:07:08,760 Speaker 1: bit contradictory to then bring something that is power intensive 113 00:07:09,279 --> 00:07:12,320 Speaker 1: into this country. How do you explain that? 114 00:07:12,680 --> 00:07:16,040 Speaker 2: Yeah, that's right. Basically, the government is trying to give 115 00:07:16,320 --> 00:07:21,240 Speaker 2: to justification. One, they say that they can't generate additional 116 00:07:21,240 --> 00:07:24,920 Speaker 2: income by sailing power to bitcoin mining companies, so that 117 00:07:25,040 --> 00:07:29,360 Speaker 2: they will build transmission lines and enable the people that 118 00:07:29,440 --> 00:07:32,760 Speaker 2: are not connected to power to get more power supply. 119 00:07:32,920 --> 00:07:35,680 Speaker 2: So that's one of the justification that government is giving. 120 00:07:36,040 --> 00:07:38,080 Speaker 2: The second one is they are saying that they are 121 00:07:38,240 --> 00:07:43,320 Speaker 2: sailing surplus power from the local demand and the deal 122 00:07:43,400 --> 00:07:46,680 Speaker 2: is not impacting the domestic power availability. 123 00:07:47,440 --> 00:07:50,440 Speaker 1: Is there any evidence that that's actually happening, that this 124 00:07:50,560 --> 00:07:54,800 Speaker 1: deal and the miners are not actually affecting local supply. 125 00:07:55,400 --> 00:07:57,720 Speaker 1: Do we have any indications at this point whether or 126 00:07:57,800 --> 00:08:00,600 Speaker 1: not it's having an impact? Maybe is it just too 127 00:08:00,680 --> 00:08:01,400 Speaker 1: early to tell. 128 00:08:02,520 --> 00:08:06,240 Speaker 2: Now the companies signed the power perponse agreement with the government, 129 00:08:06,640 --> 00:08:09,720 Speaker 2: a few of them have imported the marsionaries they will 130 00:08:09,720 --> 00:08:13,840 Speaker 2: be using for mining and the installation process, so not 131 00:08:14,000 --> 00:08:16,880 Speaker 2: many of them started operating, so it would be hard 132 00:08:16,960 --> 00:08:20,440 Speaker 2: to say the power supply or the power demand has 133 00:08:20,480 --> 00:08:23,640 Speaker 2: been affected by this company, so it's a bit too early. 134 00:08:24,920 --> 00:08:28,080 Speaker 1: So then Fasika, what's the benefit here for Ethiopia? You 135 00:08:28,160 --> 00:08:30,600 Speaker 1: walked us through a lot of the different reasons as 136 00:08:30,600 --> 00:08:34,080 Speaker 1: to why China is looking to this country. But on 137 00:08:34,120 --> 00:08:36,880 Speaker 1: the contrary, what's in it for Ethiopia. 138 00:08:37,600 --> 00:08:42,080 Speaker 2: One of the significant advantages is revenue generation from the 139 00:08:42,120 --> 00:08:45,480 Speaker 2: sale of power, so which the country will be getting 140 00:08:45,520 --> 00:08:50,400 Speaker 2: paid in dollars, So this will help severe for its 141 00:08:50,440 --> 00:08:54,880 Speaker 2: crunching that in the economy. Okay is exporting commodities that 142 00:08:55,040 --> 00:08:57,400 Speaker 2: is not more than three point one billion dollars a 143 00:08:57,480 --> 00:09:01,800 Speaker 2: year while the import value is three times hired, so 144 00:09:02,240 --> 00:09:05,000 Speaker 2: this will help the country to get more income in 145 00:09:05,160 --> 00:09:05,920 Speaker 2: foreign currency. 146 00:09:06,920 --> 00:09:11,520 Speaker 1: A succession of developing countries like Kazakhstan and others initially 147 00:09:11,600 --> 00:09:14,800 Speaker 1: embraced bitcoin mining, only to then turn on the sector 148 00:09:15,200 --> 00:09:18,320 Speaker 1: when they realized its energy use actually threatened to fuel 149 00:09:18,800 --> 00:09:22,600 Speaker 1: discontent among its population. I mean, is that something that 150 00:09:22,640 --> 00:09:25,400 Speaker 1: could also happen in Ethiopia. 151 00:09:25,520 --> 00:09:28,880 Speaker 2: Yes, there are risks. The first one is the country's stability, 152 00:09:29,200 --> 00:09:33,720 Speaker 2: So considering the nature of bitcoin mining, which requires intensive 153 00:09:33,760 --> 00:09:36,840 Speaker 2: power supply and the capital in most of the power 154 00:09:36,840 --> 00:09:39,880 Speaker 2: substations are located in CONFLICTWN areas, so. 155 00:09:39,840 --> 00:09:42,920 Speaker 1: That's right physica. For context, it's important to note the 156 00:09:42,960 --> 00:09:46,720 Speaker 1: civil war that happened in Ethiopia back in twenty twenty 157 00:09:47,040 --> 00:09:48,840 Speaker 1: and just how recent that was. 158 00:09:51,160 --> 00:09:54,880 Speaker 4: The conflict between the Tagrii region and its political entity 159 00:09:54,960 --> 00:09:58,680 Speaker 4: that to Grive People's Liberation Front and the Ethiopian government 160 00:09:59,000 --> 00:10:02,679 Speaker 4: run by Prime Ministers Abby Ahmored began on November four 161 00:10:03,080 --> 00:10:06,360 Speaker 4: after the Prime Minister accused the tpof of attacking a 162 00:10:06,440 --> 00:10:07,600 Speaker 4: federal military base. 163 00:10:08,559 --> 00:10:10,839 Speaker 3: We estimate that two point three million people are in 164 00:10:11,000 --> 00:10:14,480 Speaker 3: urgent needs of humanitarian assistance in Tiger, including one point 165 00:10:14,520 --> 00:10:18,040 Speaker 3: three million additional people due to conflict, and. 166 00:10:18,440 --> 00:10:21,680 Speaker 2: He still was broken by the African Union in twenty 167 00:10:21,679 --> 00:10:25,320 Speaker 2: twenty two, so the country is relatively stable now, even 168 00:10:25,400 --> 00:10:28,360 Speaker 2: though there are conflicts in different parts of the country. 169 00:10:29,120 --> 00:10:32,760 Speaker 2: Another risk arises if there is a persistent backlash and 170 00:10:33,440 --> 00:10:37,240 Speaker 2: an increase in local demand. This could be potentially leaved 171 00:10:37,280 --> 00:10:40,880 Speaker 2: to a change in the government's policies because, as I 172 00:10:41,000 --> 00:10:45,920 Speaker 2: previously mentioned, half of the population currently experiencing blackout conditions 173 00:10:46,400 --> 00:10:48,959 Speaker 2: and at some point the government will leave to provide 174 00:10:49,000 --> 00:10:53,040 Speaker 2: power to this segment of the population. And additionally, if 175 00:10:53,160 --> 00:10:58,400 Speaker 2: more industries require additional power, and if there are concerns 176 00:10:58,440 --> 00:11:02,760 Speaker 2: about the environmental infower of bigcoin minings and the current 177 00:11:02,840 --> 00:11:06,720 Speaker 2: flexibility from the government side may not be sustainable in 178 00:11:06,760 --> 00:11:10,720 Speaker 2: the future. So this scenario could lead to the situation 179 00:11:11,040 --> 00:11:15,080 Speaker 2: in Kazakhstan where lack of available partly to the imposition 180 00:11:15,160 --> 00:11:18,960 Speaker 2: of additional taxes on coin companies, which we're forced to 181 00:11:19,000 --> 00:11:22,800 Speaker 2: leave Kazakistan and to find that another locations to reside on. 182 00:11:26,679 --> 00:11:30,240 Speaker 1: Thanks so much to Fasika, a reporter from Addis Ababa, 183 00:11:30,600 --> 00:11:35,160 Speaker 1: for your insight and your reporting there. As Fasika mentioned, 184 00:11:35,440 --> 00:11:39,840 Speaker 1: bitcoin mining is a risky gamble for both Ethiopia and 185 00:11:40,040 --> 00:11:44,600 Speaker 1: the companies alike. Is there sufficient enough energy for mining 186 00:11:44,720 --> 00:11:48,679 Speaker 1: to expand in the country and give miners that competitive 187 00:11:48,760 --> 00:11:53,240 Speaker 1: advantage that they're seeking, but also is it even going 188 00:11:53,280 --> 00:11:57,679 Speaker 1: to be welcomed by the public. Perhaps the only guarantee 189 00:11:57,720 --> 00:12:00,920 Speaker 1: for all parties involved is the volid utility in which 190 00:12:01,040 --> 00:12:10,439 Speaker 1: crypto continues to operate in And that's it for this week. 191 00:12:10,520 --> 00:12:13,880 Speaker 1: If you like the Next Africa podcast, please follow and 192 00:12:13,960 --> 00:12:17,880 Speaker 1: review it wherever you usually get your podcast. It helps 193 00:12:17,960 --> 00:12:22,600 Speaker 1: new followers find the show. I'm Jennifer Zabasaja. Thank you 194 00:12:22,640 --> 00:12:36,880 Speaker 1: so much for listening. We'll see you next week.