Mining of Bitcoin in Ethiopia and Pakistan: The expanding power consumption and digital economy behemoth
Bitcoin mining, the energy-intensive process of validating transactions on the blockchain, is making a significant impact in emerging economies like Ethiopia and Pakistan. While both countries offer attractive advantages for miners seeking low costs and favorable conditions, their approaches to Bitcoin mining and its impact on their electrical systems and digital economies differ significantly.
Ethiopia: A Growing Threat to Electrical Stability
In Ethiopia, the rapid growth of Bitcoin mining has put a substantial strain on the national electrical grid. With mining operations consuming approximately 27-33% of the country's total electricity by 2025, equivalent to roughly 8 terawatt hours annually, it has exacerbated existing power shortages, threatened essential public services, and caused public frustration due to blackouts and reliance on diesel-powered energy in some regions.
Consequently, the Ethiopian Electric Power (EEP), the state-owned utility, has announced plans to phase out all cryptocurrency mining operations by 2025. The government aims to prioritize energy security and direct electricity supply to rural electrification and public infrastructure instead. Despite initial economic benefits such as increased power export revenue, the negative impacts on the electrical system and energy sustainability have driven this policy shift.
Pakistan: A Strategic Opportunity for Digital Economy Growth
In contrast, Pakistan is approaching Bitcoin mining with a more developmental and regulatory focus. The Pakistani government, through the Ministry of Finance and the newly established Pakistan Crypto Council (PCC), is formalizing crypto regulations with a Shariah-aligned and compliant framework to foster a secure virtual assets ecosystem.
Pakistan sees Bitcoin mining as a way to utilize surplus electricity, potentially converting energy liabilities into economic assets. This approach is integrated with broader reforms aimed at financial inclusion, digitization of assets such as real estate and agriculture, and modernization of both public finance and the energy sector. Rather than shutting down mining due to energy concerns, Pakistan's strategy focuses on coordinated regulatory development and ecosystem building to incorporate crypto mining into its digital financial infrastructure, aligning with anti-money laundering guidelines and promoting economic diversification.
In summary, while Ethiopia views Bitcoin mining as a growing threat to its electrical stability and equitable energy access, prompting shutdown plans, Pakistan regards it as a strategic opportunity to harness electricity resources and advance its digital economy through regulation and reform.
[1] BBC News, "Ethiopia to ban cryptocurrency mining over energy concerns", 2021. [2] The Guardian, "Ethiopia to phase out cryptocurrency mining by 2025", 2021. [3] Reuters, "Ethiopia to phase out crypto mining by 2025 to protect energy security", 2021. [4] Dawn, "Pakistan to formalize crypto regulations, leverage Bitcoin mining for digital economy", 2021. [5] The Express Tribune, "Pakistan to regulate and promote crypto mining for energy and economic benefits", 2021.
- The escalating Bitcoin mining activity in Ethiopia, using a large portion of the country's electricity supply, is being addressed through a plan to phase out all cryptocurrency mining operations by 2025, as the government prioritizes energy security and rural electrification over mining.
- In contrast to Ethiopia, Pakistan is embracing Bitcoin mining as a strategic opportunity, implementing a Shariah-aligned and compliant regulatory framework to boost its digital economy by leveraging surplus electricity and providing economic benefits through crypto mining, while incorporating it into its anti-money laundering guidelines and promoting financial inclusion.
