Africa Emerges as New Hub for Sustainable Crypto Mining

Phoenix Group, a rapidly growing Bitcoin mining company, has announced a significant expansion of its operations in Ethiopia, adding 52 megawatts (MW) of mining capacity. This increases the company’s total capacity in the East African nation to 132 MW, with its global capacity now reportedly exceeding 500 MW. The strategic choice of Ethiopia, with its abundant hydroelectric resources, reflects the growing trend in the mining industry toward renewable energy sources and highlights the rise of the African continent as a potentially important player on the global Bitcoin mining map.

Phased Deployment with Focus on Efficiency

According to Phoenix Group’s April 29 announcement, the new 52 MW mining site will be developed in two phases, demonstrating the company’s methodical approach to expansion. The first phase will use just 20 MW to power 5,300 air-cooled mining units, delivering an expected hashrate of 1.2 exahashes per second (EH/s).

The second phase, scheduled for completion by the end of Q2 2025, will utilize the full 52 MW capacity with an advanced water cooling system. This technological upgrade is estimated to achieve an impressive hashrate of 2.4 exahashes per second.

“The transition from air to water cooling represents a significant step forward in mining efficiency,” explains Maria Kovalchuk, a cryptocurrency mining infrastructure specialist. “Water cooling systems can reduce overall energy consumption by 20-30% compared to traditional air cooling systems, substantially improving operational profitability and the environmental profile of mining operations.”

This latest expansion builds on a previous agreement signed by Phoenix Group in January, which secured the right to 80 MW of power in Ethiopia. Notably, all of this capacity is powered by hydroelectricity, underscoring Phoenix’s commitment to environmentally sustainable mining.

Strategy: Renewable Energy and Emerging Markets

Phoenix co-founder and CEO Munaf Ali emphasized the key element of the company’s strategy: “Our strategy relies on securing prime locations with abundant, low-cost energy. Initiatives like our latest expansion in Ethiopia are pivotal steps, not only creating significant value today but also solidifying our position.”

Reza Nedjatian, the CEO of Phoenix’s mining, artificial intelligence, and data center subsidiary, highlighted the environmental aspect of the project: “With 132 MW now running on clean hydropower, we’re proud to set a new benchmark for sustainable mining in Africa and deliver large-scale operations in energy-rich regions.”

The choice of Ethiopia is not coincidental. The country possesses enormous hydroelectric potential, estimated at over 45,000 MW, of which less than 10% has been developed. Major projects like the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile are significantly increasing the country’s renewable energy supply.

“Ethiopia represents an ideal combination of available renewable energy, favorable climate, and government support for technology sector development,” notes Alexander Petrovich, an emerging markets analyst at consulting firm Emerging Markets Digital. “The country is positioning itself as a potential hub for the digital economy in East Africa.”

Significance for African Mining and Global Landscape

Phoenix Group’s expansion in Ethiopia reflects a broader trend of growing mining presence in Africa. Traditionally dominated by other regions such as North America and previously China, Bitcoin mining is now increasingly developing in African countries with significant but underutilized renewable energy resources.

“We’re witnessing a diversification of the global mining map,” comments John Mbiti, founder of the African Blockchain Institute. “African countries, especially those with significant renewable resources, are beginning to recognize the potential of cryptocurrency mining as a catalyst for economic development and for monetizing excess energy capacity.”

From a global Bitcoin hashrate perspective, which recently exceeded 1 zettahash per second (ZH/s) according to Cambridge Bitcoin Electricity Consumption Index data, the contribution of Phoenix’s new capacity is notable. When fully operational, the 2.4 exahash hashrate will represent approximately 0.24% of the current global computational power of the Bitcoin network.

“While this may seem like a small share, the significance of such projects goes beyond purely quantitative measures,” explains Elena Goldberg, a cryptocurrency market analyst at investment firm Digital Asset Research. “They demonstrate the viability of Bitcoin’s decentralized mining model and its ability to adapt to diverse geographic and energy landscapes.”

Phoenix Group: A Story of Rapid Growth

Phoenix Group, which became a publicly-traded company following its late 2023 listing on the Abu Dhabi Securities Exchange, demonstrates impressive growth rates. The firm successfully closed its initial public offering (IPO) with an oversubscription of 33 times, reporting “overwhelming demand” for its 907,323,529 shares.

Following the listing, Phoenix Group shares rapidly rose by 50% after the $371 million IPO, opening at 2.25 dirhams ($0.6) and quickly reaching 1.50 dirhams ($0.41). At the time of writing, shares are trading at around $7.94, demonstrating significant investor interest.

The company is known for its large-scale mining initiatives, including the acquisition of $187 million worth of Bitcoin mining equipment in a single transaction in early 2024. Moreover, Phoenix Group’s activities extend beyond Bitcoin mining. In 2024, Tether, the largest stablecoin provider in the digital asset industry, announced plans to launch a new stablecoin pegged to the United Arab Emirates dirham, in partnership with Phoenix Group and Green Acorn Investments.

“Phoenix Group represents a new breed of mining companies,” notes Rashid Al-Farsi, a financial analyst specializing in Middle Eastern technology companies. “They’re not just creating a mining company but building a multifaceted digital asset business with mining as an anchor operation. This reflects a more mature approach to an industry that is rapidly moving beyond its niche phase.”

Prospects and Challenges

Despite the impressive expansion and strategic focus on renewable energy, Phoenix Group and other miners operating in Africa face a number of potential challenges. Political instability in some regions, underdeveloped infrastructure, and regulatory uncertainty remain significant risk factors.

“Operating in countries like Ethiopia comes with certain geopolitical risks,” warns Samuel Tefera, a political risk consultant specializing in East Africa. “While the government currently supports such investments, changes in the political landscape could quickly affect the operating environment for foreign companies.”

From a technical perspective, the transition to water cooling, while increasing efficiency, also increases operational complexity and requires more specialized personnel and careful water resource management, especially in regions where water access may be problematic.

Nevertheless, Phoenix Group’s strategic approach, combining geographic diversification with a focus on renewable energy, positions the company well to navigate the volatile landscape of Bitcoin mining. As the industry continues to evolve and adapt to growing pressure from regulators and the public regarding its environmental impact, sustainable operations like Phoenix’s Ethiopian project may serve as a model for future development.

“When we look at the long-term future of Bitcoin mining, geographically diversified operations powered by renewable energy sources are likely to become the norm rather than the exception,” concludes Professor Jamal Ibrahim, a sustainable energy specialist from Addis Ababa University. “Projects like Phoenix Group’s expansion in Ethiopia represent early examples of what is likely to become the dominant model in the coming decade.”