Currently, Ethiopian Electric Power, the state energy utility, charges Bitcoin miners a fixed rate of 3.14 US cents per kilowatt-hour for electricity sourced from substations, a price expected to fall once miners connect directly to power plants.

Chinese companies have arrived in Ethiopia to take advantage of the country’s new generation capacity from the Grand Ethiopian Renaissance Dam (GERD), a new report says.

The Renaissance Dam, which is now completely filled, has elevated Ethiopia’s installed generation capacity to 5.3 gigawatts, with 92% of this capacity sourced from hydropower, a renewable energy source.

According to the report by Bloomberg magazine, the state power monopoly has already struck power supply deals with 21 Bitcoin mining companies, all but two of them are Chinese. Ethiopia has already risen to become one of the world’s top recipients of Bitcoin mining machines, the report adds.

The Ethiopian government permitted Bitcoin mining mainly because the companies pay in foreign currency for the electricity they consume, Yodahe A. Zemichael, deputy Director at the Information Network Security Administration said in a response to questions from Bloomberg News.

The government has also implemented a directive aimed at regulating ‘cryptographic products,’ including mining but the issuance of licenses remains in a sandbox phase and is in the early stages of development.

For Bitcoin miners, particularly those from China where, as reported by BitKE in 2021, the country ran a purge on the industry, Ethiopia presents a distinctive combination of economic and political benefits. Some executives even view Ethiopia as a potential competitor to Texas, which accounts for as much as a quarter of the global Bitcoin mining capacity.

It is projected that once GERD is fully completed, Ethiopia’s generation capacity will double. Currently, Ethiopian Electric Power, the state energy utility, charges Bitcoin miners a fixed rate of 3.14 US cents per kilowatt-hour for electricity sourced from substations, a price expected to fall once miners connect directly to power plants.

According to Bloomberg, Ethiopia is in dire need of foreign currency inflows. It is currently in negotiations for a bailout from the International Monetary Fund (IMF) after defaulting on an interest payment to private creditors in December 2023.

Chinese Bitcoin miners are also starting to look at countries like Angola and Nigeria.