Workers install solar panels at the Karoo Fresh Produce (Pty) Ltd. farm in Groenfontein
Sometimes, starting fresh with custom solutions can be far more efficient than patching and updating older systems. That's why Africa's underdeveloped electrical infrastructure offers a lucrative opportunity for bitcoin miners using renewable energy and off-grid technologies.
Bitcoin mining—the process that appends transactions to the bitcoin blockchain and secures the overall network—can offer a way to scale energy storage and demand in lockstep with growing communities. In short, it's easy to turn bitcoin mining hardware on and off to suit demand.
Despite widespread concerns about the prospect of environmental damage caused by bitcoin mining's carbon footprint, industry studies reveal that bitcoin mining may be one of the world's most sustainable tech industry sectors. For example, Q4 2022 data published by the global consortium Bitcoin Mining Council indicated that 58.9% of the global energy consumption associated with bitcoin mining comes from renewables. In my home country of Nigeria, the bitcoin industry offers unique ways to tackle urbanization issues with homegrown solutions.
These solutions are less likely to rely on legacy electrical grids than any North American counterparts. Instead, many hydropower bitcoin miners provide an always-on-demand buyer of first and last resort for energy projects in developing areas.
More than 500 million people in Africa currently lack reliable electricity access, according to the International Energy Agency. As such, one of Africa's most effective bitcoin mining strategies is to build micro grids powered by renewable energy sources in rural communities beyond the reach of main power grids.
This symbiosis between bitcoin miners and remote communities attracts hobbyists and companies that both see vast growth potential for the bitcoin industry across Africa.
Gridless Bitcoin Mining In East Africa
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Gridless Mining Facility in Kenyahttps://gridlesscompute.com/
For example, beyond Nigeria's rural hobbyists, the Kenyan bitcoin mining company Gridless uses similar hydro-powered micro grids (under 1 megawatt capacity) to provide electricity to three rural communities in East Africa. The company raised $2 million in seed funding led by Jack Dorsey's Block and the bitcoin venture capital firm Stillmark earlier this year to expand operations to other rural communities across Kenya.
In an effort to standardize a common approach to sustainable bitcoin mining and encourage collaboration across industry players, Gridless launched the Green Africa Mining Alliance (GAMA) with three other companies, Sukuma Ventures from Kenya, Trojan Mining from Nigeria, and QRB Labs from Ethiopia. Earlier this month, they released the "Blueprint for Bitcoin Mining and Energy in Africa" report with actionable insights for "reducing the electricity-access gap in underprivileged regions" using small, custom grids and bitcoin data centers.
Although bitcoin-savvy entrepreneurs and investors see the lucrative potential for eco-friendly bitcoin mining sites across Africa, opaque regulations still present various challenges.
The Bitcoin Mining Regulatory Landscape in Africa
Many African bitcoin hobbyists and miners prefer to remain anonymous rather than join public-facing corporate ventures like GAMA for fear of government backlash. African governments have neither explicitly forbidden bitcoin mining nor offered clear bitcoin mining regulations. Therefore, some off-grid bitcoin miners see that uncertainty as not worth the risk of drawing attention to themselves.
Nonetheless, those who operate relatively large bitcoin mining operations struggle to receive energy development licenses, not to mention the high cost of importing hardware equipment for bitcoin mining. Regardless of the regulation that may arise as the bitcoin mining industry becomes a more prevalent part of African economies, it's clear that we've only scratched the surface of what is possible when African communities develop their infrastructure solutions.
On the whole, bitcoin usage beyond crypto exchange platforms remains a grassroots movement across Africa. For this reason, organizations like GAMA take a long-term approach to growth rather than merely rushing to replicate bitcoin mining models already popularized in Asia, Europe, and the Americas.
While challenges still need to be addressed and questions answered, such as regulatory requirements for bitcoin-powered companies and the steep hardware costs, Africans are already pioneering the future of sustainable bitcoin mining methods and systems.