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Bitcoin mining is revolutionizing power generation in Africa, supporting rural electrification and transforming energy economics. In this Part I, Blink explores the impact of mining on the continent, with insights from industry leaders and a deep dive into Ethiopia's evolving Bitcoin regulations
If decentralization is a priority, Bitcoin mining in Africa is a priority. It’s as simple as that. Now, add all the power generation developments that the mining industry finances in the continent on top of it, and we have the feel-good story of the decade. Here at Blink, we started exploring Bitcoin mining in Africa in this article, and it’s time to double down.
Join us as the protagonists of the story take us on a guided tour of the continent. In a follow-up article, we’ll focus on several mind-blowing projects in development or already in motion. In this first installment, we’ll explain the new model’s reason-to-be, acknowledge the difficulties, and deep dive into the bitcoinization of Ethiopia. To do that, we invited:
With a special presentation by Bitcoin Core contributor Abubakar Nur Khalil via quotes.
Let’s do this!
While discussing Bitcoin mining in Africa, one of the first names that comes up is Gridless. In December 2022, a seed investment of $2 million led by Jack Dorsey’s Block and a venture capital firm put them on the map. According to their website, “Gridless works with renewable, rural, mini-grid energy generators to monetize the full capacity of their output as a buyer of last resort, as well as serving as an anchor tenant for new energy generation creation.”
We interviewed Gridless co-founder Janet Maingi, who better explained how and why the company brings power to new sites:
“It takes a very long time for a community to start consuming electricity at a large scale (initially it is just LED lights and phone charging). This means that these energy companies often struggle to pay their bills. Gridless has been able to come in and immediately monetize their wasted energy through the addition of Bitcoin mining.”
Among the mining industry’s most revolutionary characteristics, we find that ASICS are extremely portable, and the operators are highly incentivized to look for the cheapest electricity available. The mix of those two factors could power the whole planet. Bitcoin mining could potentially reach the most remote villages and, Maingi explains:
“The 2nd and 3rd order effects of this additional monetization are that the energy company can now pay its employees, and they also have the funds to increase the reach of their grid meaning more people get access to electricity.”
In Blink’s previous article about Bitcoin mining in Africa we wrote, “In the recent past, the only way to finance gigantic energy projects was by government subsidies or risky loans by supranational entities.” The game had come to a standstill. Janet Maingi echoes the sentiment, “The existing model for energy development is broken as it is highly dependent upon concessionary funding from Western donors.”
That highly centralized system put all the power in the hands of a few, just as the world’s controllers intended it. What could possibly upset that balance? Bitcoin, that’s what. Maingi expands on the idea from Gridless’s perspective:
“We believe new energy can be developed on the basis of Bitcoin economics at a pace and scale never before seen in Africa. We can now go to communities that would have never justified a new energy project under the old model and immediately build something that is both profitable and meets the energy access needs of the surrounding area.”
The possibilities are endless under this new model. Maingi knows this, and thus states, “the future of Gridless will be in the development of new energy sites.”
The previous sections of the article and the new model are thrilling, sure. However, none of what we described will happen overnight. There are significant hurdles in the way of the Bitcoin mining industry in Africa. To further explain, let’s pass the mic to Jesse. Besides hosting the HashrateUp podcast, Jesse’s mission is to help grow Africa’s hashrate by any means necessary.
So, how hard is it to acquire a current generation ASIC miner in the continent?
“Quite hard. Usually, those machines are not imported from America or Europe. Depending on the manufacturer, they come from Asia; Malaysia, China, Thailand, or Indonesia. A price that makes sense depends on regulation. South Africa is quite difficult to manage due to high duties. Ethiopia is a lot easier if done correctly.
Generally speaking, it’s necessary to have a good local contact on the ground. Not just for project execution, but also for importation of any infrastructure as well as the mining gear.”
Besides high taxes, another headache Bitcoin miners in Africa must face is regulatory uncertainty. We are aware of all the electric wonders the industry brings with it, but politicians are politicians. Failing to see the whole picture is in their work description. To further explain the situation in Ethiopia, Bitcoin Core contributor Abubakar Nur Khalil wrote:
“Nevertheless, bitcoin miners are cautious about the future of regulation in the country. As other regions have shown, bitcoin mining has no permanent regulatory cushion. It is also too early to predict whether Ethiopia will switch its stance on bitcoin mining as Iran and Kazakhstan did when it started competing with domestic energy demand.”
And, since we’ve mentioned Ethiopia twice, let’s deep dive into the country’s current situation regarding Bitcoin mining.
According to BitcoinBirr’s GitHub page, all roads lead to Bitcoin. However, regarding Bitcoin mining in Africa, it seems like at the moment all roads lead to Ethiopia. BitcoinBirr’s leader, Kal Kassa explains, “Within the past 9 months; BBC, CNBC, Bloomberg, Le Monde, France24 & RFI, as well as countless local channels, radio stations, and other news sources have reached out to either myself or a moderator at BitcoinBirr. Primarily to talk about Bitcoin mining in Ethiopia.”
And now, Blink joins that select list.
Let’s clarify before getting into it, “BitcoinBirr is an open source initative to educate and share bitcoin material with Africans. 2021 priorities include translating copies of various books and relevant materials in local Ethiopian and Eritrean languages.” Besides that, as his profile picture clearly shows, Kassa is deeply entrenched in the Bitcoin mining industry.
According to BitcoinBirr’s leader, the Ethiopian government is currently divided on the Bitcoin issue, “depending on which Minister you speak to, their responses currently vary from support to disgust.” However, the Information Network Security Agency (INSA) wrote a law that the Ethiopian Investment Commission (EIC) is currently editing. “I also understand that several members of the business community, including lawyers and bitcoin miners have seen and commented on the draft law,” he told Blink.
The question is, what will happen if and when said law is approved?
“This law will help the existing bitcoin miners in Ethiopia scale and new miners begin operations with a transparent legislation in place. This law may be written as a Proclamation or a Directive, but it becomes official once it's published on the Federal Negarit Gazeta. Of course, implementation and enforcement will be completely different things and will also require heavy lifting as we're never out of the woods.”
Ethiopia’s Bitcoin law is the complete package, it will also cover “accounting standards, transactions and bitcoin as a payment.” According to Kassa’s assessment, that part will be more controversial and contested. Bitcoin mining, on the other hand, has the support of “offices like the Ethiopian Electric Power, the Ethiopian Investment Commission and the Information Network Security Agency (INSA).”
For the touching finale, regarding “all of these government offices and officials,” Kassa says he’s “very proud of the work they've done and the progress they've made.”
The controversial but necessary Grand Ethiopia Renaissance Dam or GERD is a gigantic project in which the Ethiopian government is currently involved. Abubakar Nur Khalil explained the situation in the previously linked article:
“In Ethiopia, for example, over 40% of its population, roughly 120 million people, are without electricity. Yet, the country has an installed capacity generation of over 5,000 MW and anticipates a projected additional install capacity generation of ~5,150 MW following the completion of the Grand Ethiopia Renaissance Dam (GERD), the largest hydroelectric project in Africa.”
The Ethiopian Embassy paints a clearer picture of the magnitude of the project:
“The purpose of the GERD is lifting millions of people out of poverty and provide access to electricity to more than 60 million Ethiopians and provide affordable electricity to the service, industrial and agriculture economic sectors.”
To put that into numbers, “with its 5,150 MW installed power generation capacity, GERDP will increase Ethiopian Hydroelectric power generation by 15,692 GWh/year on average.” The controversy comes from Egypt, which is vehemently against the project. However, it seems like consensus is forming around it. Ethiopia’s Prime Minister Abiy Ahmed Ali recently tweeted:
“Historic moment for Ethiopia as the Agreement on the Nile River Basin Cooperative Framework (CFA) is ratified by South Sudan. This diplomatic milestone marks a significant step in our collective aspiration for regional cooperation in the Nile Basin.”
What does this have to do with Bitcoin, though? Well, apparently, a fraction of that power will go directly to Bitcoin mining. Kal Kassa comments on the project’s current status:
“There are ~20 bitcoin miners registered and ~5 hashing, for the past 6 months, new bitcoin miners have been asked to pause their registrations because the newly drafted Bitcoin law is still to be signed into law by Parliament.”
To close it off, Kassa shared with Blink the plans for The Bitcoin Summit, an invite-only event BitcoinBirr is putting together. “Its purpose is to bolster Bitcoin’s development in Ethiopia and across Africa.”
All roads lead to Ethiopia, but the country is far from being the only one interested in the hardest currency in the world. Bitcoin mining in Africa is blooming all over the continent, and in our next article, Blink will feature several projects and focus on the immediate future of the industry. Coming soon to this very blog.
