Arriving in Ethiopia we came to the stark realization not all paper currency is treated equally. The Egyptian pounds in our pockets were worth nothing because the currency wasn’t accepted at the Addis Ababa airport. A similar theme from Egypt presented itself. The Ethiopian Birr also had varying rates at the bank (1 USD = 55 ETB) and the street (1 USD = 110 ETB). That’s a 100% premium! They even had a website that tracks the black market value!
Ethiopia has never been colonized, and its roots and traditions are quite noticeable as one explores Addis, the capital. The city is witnessing plenty of skilled Ethiopian diaspora returning home from Western countries to fuel economic growth, especially in technology. Heavy investments and programs focus on making Addis an African IT hub to rival other African cities like Lagos, Nairobi, and Cape Town.
We were fortunate enough to present at an innovation hub (ALX Ethiopia) to nearly 100 students. The topic? Building products and services using bitcoin has monetary infrastructure.
Given the issues with the Ethiopian Birr, the students were very open to the idea of bitcoin and the problems it could solve for them. Thankfully we had a helping hand. Kal Kassa, founder of Bitcoin Birr, an open-source initiative in Addis has spent years raising awareness about money, bitcoin, and mining. They’ve translated important pieces of work into Amharic (the native language in Ethiopia) and other languages to make this subject accessible to the local demographic.
The crown jewel of Ethiopia when it comes to bitcoin is its capacity to produce hydroelectric energy. It currently produces ~4000 MW and has the potential to generate 45000 MW, a mere 9% utilization! This hydroelectric energy comes at an extremely affordable price (~$0.01-0.03 kw/h) making it a very lucrative destination for mining bitcoin. The troubled currency, a push towards innovation and its massive hydro potential give Eithopia the perfect ingredients to be the African capital for Bitcoin mining. Partnerships and power supply agreements are becoming common to increase the footprint of mining centers in Ethiopia.
Back to the ETB. As of July 2024, they secured a $10.7 billion loan from the IMF and World Bank, causing the ETB bank rate to free fall and inch closer to its street rate. Currently 1 USD = 124 ETB at the bank and 1 USD = 130 ETB in the streets. To the locals, the bank rates now reflect a sense of reality they encounter daily. It will be interesting to see how Ethiopia leverages its hydroelectric potential to maximize bitcoin mining and its benefits to enrich the lives of its people.
Next up, Kenya.
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Sources:
https://www.ethioblackmarket.com
https://worldpopulationreview.com/country-rankings/cost-of-electricity-by-country
https://www.aimspress.com/aimspress-data/aimse/2022/1/PDF/energy-10-01-006.pdf
https://www.bbc.com/news/articles/cxr2k24z29xo