Why Africa is crypto’s next frontier

is like pouring water on an even floor. It will always go to the lowest point,” says Erik Hersman, a tech entrepreneur in Nairobi, Kenya’s capital, explaining how the energy-intensive activity of creating, or “mining”, the digital currency gravitates to places with the cheapest power costs. Until 2021 the Dead Sea for bitcoin was China, before the government banned it, citing the environmental harm it causes.

Many governments fret that by competing for electricity with local homes and businesses, the miners’ energy-guzzling computers will fuel social discontent. “The worldwide search for cheap power is on,” says Troy Cross, a bitcoin expert at Reed College in Oregon. “If you don’t get cheap power, you don’t survive the halving.”

Neighbouring Kenya is likewise eager to get in on the action, says Mr Hersman, whose own crypto-mining company, Gridless, began operations in three African countries in the past year. Though the continent’s total contribution to global bitcoin production is negligible, some investors think that Ethiopia could match the capacity of Texas, the current hub. Africa is “definitely” the industry’s next frontier, says Adam Swick of Marathon Digital, America’s largest listed crypto-mining firm.

There has also been booming interest in using and owning cryptocurrencies in parts of Africa. That may have less to do with any intrinsic advantages they offer than with the weaknesses of domestic currencies such asThere is, however, scant evidence that cryptocurrencies offer poor countries a shortcut to riches. In 2022 the Central African Republic became the second country in the world to make bitcoin legal tender. But the move the move failed to spur investment in this militia-plagued country.

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