Speaker 1: Bitcoin hasn't had the best couple of months, but is
Speaker 1: well up on the lows of last year, and its
Speaker 1: cheerleaders are bullish.
Speaker 2: I think we're seeing more long term holders. Bitcoin has
Speaker 2: a lot of value.
Speaker 1: We can actually expect over one hundred K and pricing
Speaker 1: by end of year.
Speaker 3: You can learn a lot from watching what the miners
Speaker 3: are doing. They've been investing, They've obviously been betting their
Speaker 3: businesses on the price of bitcoin going up, and it
Speaker 3: looks like they're about to win their bet.
Speaker 1: With the renewed attention, focus has turned to mining of
Speaker 1: the token and the best places to do it. In
Speaker 1: years past, many cryptocurrency miners would have been investing in China,
Speaker 1: but that's not an option anymore.
Speaker 3: Minu is us shutting down they computer is.
Speaker 1: In twenty twenty one, the Chinese government called a crackdown
Speaker 1: on the cryptocurrency industry.
Speaker 3: They said their own crypto related transaction will be considered
Speaker 3: illicit activity.
Speaker 1: And that's how some crypto miners left China and moved
Speaker 1: their operations to places like Ethiopia, a stable economy, perfect
Speaker 1: weather conditions, and some of the world's lowest electricity costs.
Speaker 1: When we talk about crypto mining. It seems like Ethiopia
Speaker 1: has it all, but in a country with power scarcity
Speaker 1: and increasing climate change concerns, how viable is this industry Already?
Speaker 2: The government started to receive a backlash from different people
Speaker 2: from the country, saying supplying power to the mining company
Speaker 2: is not right. Why half of the population doesn't have
Speaker 2: access to power.
Speaker 1: I'm Jennifer's Abasaja. This is the Next Africa podcast, bringing
Speaker 1: you one story each week from the continent with the
Speaker 1: context only Bloomberg can provide. In this week's episode, Bloomberg
Speaker 1: reporter Fasika Tedessa speaks to us from Adis Ababab about
Speaker 1: whether Ethiopia is really primed to be the new crypto
Speaker 1: mining heaven. So how did Chinese miners set their hearts
Speaker 1: on Ethiopia. Let's bring in Fisica Tedesa joining us from
Speaker 1: Adis Ababa, Halfaska. So what are the reasons behind the
Speaker 1: shifts and why miners are now looking to Ethiopia.
Speaker 2: In twenty twenty two, the government has made a change
Speaker 2: in the policy in letting it coin mining companies to
Speaker 2: get registered and the start operating in Ethiopia. The second
Speaker 2: one is the ideal or favorable climate Ethiopia has for
Speaker 2: bitcoin mining, so basically bitcoin mining needs five to twenty
Speaker 2: five said, Whichitopia has.
Speaker 1: What are the other reasons then Pasica.
Speaker 2: Another benefit lies in the abundance electricity power in Ethiopia.
Speaker 2: So currently the country has a little over five thy
Speaker 2: two hundred mega out of energy, so we possibly of
Speaker 2: doubling that capacity in the coming few years once the
Speaker 2: Ethopian Grand Renaissance m which is the largest in Africa,
Speaker 2: becomes operational. The other major factor that attracted Chinese companies
Speaker 2: to come to Ethiopia is the low electricity cost. Power
Speaker 2: agencies charging bitcoin mining companies affixed rate that at three
Speaker 2: point one for US and s per kilo at an
Speaker 2: hour for electricity sources from the power sub stations connected
Speaker 2: to coin mining facilities.
Speaker 1: And you would think it might make more sense to
Speaker 1: operate and mine in China, but how come they've chosen
Speaker 1: not to.
Speaker 2: The reason given by the Chinese government was that bitcoin
Speaker 2: mining has impacts on the environment and also at the
Speaker 2: same time, cryptocurrency trading can be used for fraudulent activities
Speaker 2: and money laundering. So because of that, Chinese companies we're
Speaker 2: looking for a better place to work or to operate
Speaker 2: in Pasica.
Speaker 1: You mentioned the environment. Bigcoin absolutely is an industry that
Speaker 1: consumes a lot of energy.
Speaker 3: A single ledger entry and bitcoin consumes enough energy to
Speaker 3: power your house for almost to day.
Speaker 1: What's a climate crisis? Surely being in Ethiopia, there are
Speaker 1: still a number of environmental concerns. So why then was
Speaker 1: Ethiopia so willing.
Speaker 2: The government highly leads these companies to come to Ethiopia
Speaker 2: because the government can directly generate income in foreign currency.
Speaker 2: So the other part is from the investment perspective. Because
Speaker 2: of the deadly war that happened in the northern part
Speaker 2: of the country, most of the investors lost confidence in
Speaker 2: investing in to Okay. So these are the two major
Speaker 2: reasons that the government is allowing companies to come to
Speaker 2: topid despite the butlers and the environment.
Speaker 1: What can you tell us about the bilateral relations between
Speaker 1: these two countries. There must be some political elements to
Speaker 1: this as well.
Speaker 2: China stands as one of the major bilateral creditors to Ethiopia,
Speaker 2: and also Chinese companies are known for holding the first
Speaker 2: place in FDI or foreign investment flows into Ethiopia, and
Speaker 2: also several Chinese companies has held construction of the largest
Speaker 2: dam of Ethiopia and also they built the major railway
Speaker 2: that Connectsopia with Dawooty. They also built the major or
Speaker 2: the main airport of Ethiopia. This economic and political activity
Speaker 2: shows that there is a strong tie between Ethiopia and China.
Speaker 1: So, Piska, earlier you mentioned the dam and how China
Speaker 1: helped build it. The four point eight billion dollars dam,
Speaker 1: and it's one of the largest on the continent, as
Speaker 1: you mentioned, can you talk to us about its significance,
Speaker 1: especially when we think about that dam in relation to
Speaker 1: now what's happening with bitcoin mining.
Speaker 2: Yes, Jennifer, as you said, it's one of the largest
Speaker 2: dums in Africa. Is the capacity of generating five two
Speaker 2: hundred megallards of energy. So the government highly relies on
Speaker 2: this term since it will help the country to boost
Speaker 2: its power generating capacity with the aim of exporting more
Speaker 2: power to never in countries including Djibouti, Sudan, Kenya, and
Speaker 2: also they are planning to move sell power to Tanzania.
Speaker 2: And also not to forget that they are signing deals
Speaker 2: with bitcoin mining companies which require intensive power supplies.
Speaker 1: So how can Ethiopia grow an industry that needs intensive power. Well,
Speaker 1: half of its population doesn't actually have access to electricity.
Speaker 1: That's after the break welcome back. Fifty percent of the
Speaker 1: Ethiopian population and live without electricity. So it feels a
Speaker 1: bit contradictory to then bring something that is power intensive
Speaker 1: into this country. How do you explain that?
Speaker 2: Yeah, that's right. Basically, the government is trying to give
Speaker 2: to justification. One, they say that they can't generate additional
Speaker 2: income by sailing power to bitcoin mining companies, so that
Speaker 2: they will build transmission lines and enable the people that
Speaker 2: are not connected to power to get more power supply.
Speaker 2: So that's one of the justification that government is giving.
Speaker 2: The second one is they are saying that they are
Speaker 2: sailing surplus power from the local demand and the deal
Speaker 2: is not impacting the domestic power availability.
Speaker 1: Is there any evidence that that's actually happening, that this
Speaker 1: deal and the miners are not actually affecting local supply.
Speaker 1: Do we have any indications at this point whether or
Speaker 1: not it's having an impact? Maybe is it just too
Speaker 1: early to tell.
Speaker 2: Now the companies signed the power perponse agreement with the government,
Speaker 2: a few of them have imported the marsionaries they will
Speaker 2: be using for mining and the installation process, so not
Speaker 2: many of them started operating, so it would be hard
Speaker 2: to say the power supply or the power demand has
Speaker 2: been affected by this company, so it's a bit too early.
Speaker 1: So then Fasika, what's the benefit here for Ethiopia? You
Speaker 1: walked us through a lot of the different reasons as
Speaker 1: to why China is looking to this country. But on
Speaker 1: the contrary, what's in it for Ethiopia.
Speaker 2: One of the significant advantages is revenue generation from the
Speaker 2: sale of power, so which the country will be getting
Speaker 2: paid in dollars, So this will help severe for its
Speaker 2: crunching that in the economy. Okay is exporting commodities that
Speaker 2: is not more than three point one billion dollars a
Speaker 2: year while the import value is three times hired, so
Speaker 2: this will help the country to get more income in
Speaker 2: foreign currency.
Speaker 1: A succession of developing countries like Kazakhstan and others initially
Speaker 1: embraced bitcoin mining, only to then turn on the sector
Speaker 1: when they realized its energy use actually threatened to fuel
Speaker 1: discontent among its population. I mean, is that something that
Speaker 1: could also happen in Ethiopia.
Speaker 2: Yes, there are risks. The first one is the country's stability,
Speaker 2: So considering the nature of bitcoin mining, which requires intensive
Speaker 2: power supply and the capital in most of the power
Speaker 2: substations are located in CONFLICTWN areas, so.
Speaker 1: That's right physica. For context, it's important to note the
Speaker 1: civil war that happened in Ethiopia back in twenty twenty
Speaker 1: and just how recent that was.
Speaker 4: The conflict between the Tagrii region and its political entity
Speaker 4: that to Grive People's Liberation Front and the Ethiopian government
Speaker 4: run by Prime Ministers Abby Ahmored began on November four
Speaker 4: after the Prime Minister accused the tpof of attacking a
Speaker 4: federal military base.
Speaker 3: We estimate that two point three million people are in
Speaker 3: urgent needs of humanitarian assistance in Tiger, including one point
Speaker 3: three million additional people due to conflict, and.
Speaker 2: He still was broken by the African Union in twenty
Speaker 2: twenty two, so the country is relatively stable now, even
Speaker 2: though there are conflicts in different parts of the country.
Speaker 2: Another risk arises if there is a persistent backlash and
Speaker 2: an increase in local demand. This could be potentially leaved
Speaker 2: to a change in the government's policies because, as I
Speaker 2: previously mentioned, half of the population currently experiencing blackout conditions
Speaker 2: and at some point the government will leave to provide
Speaker 2: power to this segment of the population. And additionally, if
Speaker 2: more industries require additional power, and if there are concerns
Speaker 2: about the environmental infower of bigcoin minings and the current
Speaker 2: flexibility from the government side may not be sustainable in
Speaker 2: the future. So this scenario could lead to the situation
Speaker 2: in Kazakhstan where lack of available partly to the imposition
Speaker 2: of additional taxes on coin companies, which we're forced to
Speaker 2: leave Kazakistan and to find that another locations to reside on.
Speaker 1: Thanks so much to Fasika, a reporter from Addis Ababa,
Speaker 1: for your insight and your reporting there. As Fasika mentioned,
Speaker 1: bitcoin mining is a risky gamble for both Ethiopia and
Speaker 1: the companies alike. Is there sufficient enough energy for mining
Speaker 1: to expand in the country and give miners that competitive
Speaker 1: advantage that they're seeking, but also is it even going
Speaker 1: to be welcomed by the public. Perhaps the only guarantee
Speaker 1: for all parties involved is the volid utility in which
Speaker 1: crypto continues to operate in And that's it for this week.
Speaker 1: If you like the Next Africa podcast, please follow and
Speaker 1: review it wherever you usually get your podcast. It helps
Speaker 1: new followers find the show. I'm Jennifer Zabasaja. Thank you
Speaker 1: so much for listening. We'll see you next week.