Tuesday, January 31, 2023
  • The continent has decent speed in internet connection and limitless renewable energy sources that can sustain bitcoin mining in Africa
  • If the African crypto ecosystem does not utilize the advantages of mining bitcoin, investors from foreign countries will fill in the gap and take a shot at a fortune from it
  • Considering the fast growth in engagement with cryptocurrency, it is time for Africans to venture into the most profitable forms of trade in the crypto ecosystem

Bitcoin mining vs Bitcoin buying: What is more profitable for Africans

2022 has been characterized by an increased population of crypto miners in Africa. This is because the continent has a wide range of renewable sources of energy that can sustain crypto mining while at the same time reducing pollution accrued to the venture.

In May, KenGen, an electricity-producing company in Kenya, announced that its Silicon Valley intends to supply surplus electricity to crypto miners. In June, the Central African Republic made bitcoin a legal currency. Their long-term plan will be to allow the crypto community to invest in crypto mining as an avenue to give life to the untapped energy sources in the country.

South Africa houses a significant player in Africa bitcoin mining known as Bitfarms, which operates several mines in the country. Genesis Mining, one of the largest cloud mining companies, also has a set base in the country.

Nigeria also has its fair share in Africa bitcoin mining. This is a hard fact considering that the country does not have a consistent electricity supply to its citizens. Nigerian crypto traders and miners have proven resilient despite the Central Bank restricting crypto activities in the country.

The crypto adoption rate is on a steady rise after a 1200 per cent increase between January 2021 and January 2022. Considering the fast growth in engagement with cryptocurrency, it is time for Africans to venture into the most profitable forms of trade in the crypto ecosystem.

Read: The environmental impact of cryptocurrency adoption and usage

Africa Bitcoin Mining Vs Africa Bitcoin trading

As stated earlier, Africa stands in the best position to supply the surplus electricity required for crypto mining. This is because of the wide range of renewable energy sources (wind, solar, geothermal) and the available large tracks of land.

Whether to buy or to mine depends on how long you plan to mine, the resources you have and how you think the price of bitcoin will perform in the long run.

Benefits of bitcoin mining in Africa

  • With crypto mining, there is a continuous flow of bitcoins to your wallet, irregardless of the volatility of prices. When you buy a miner, you get a machine that converts electricity into bitcoins. The machine allows you to mine every day, provided there is a steady supply of electricity. The converted bitcoins are transferred to your wallet. As long as people buy and sell crypto, a crypto miner will have some crypto in the wallet.
  • Participating in crypto mining will give Africans a chance to participate in reinforcing the security of the bitcoin blockchain. The more miners verify transactions, the more decentralized cryptocurrency gets. As the adoption growth rate has shown, a large population of Africans believe in crypto. What is a better way to protect what you believe in than directly participating in strengthening its security?
  • Bitcoin mining in Africa will force investors to tap the unused sources of electricity in African countries. This will add electricity production to the grid, favouring citizens lacking electricity connections.
  • Bitcoin Mining in Africa will increase revenue collection and create employment in countries that will embrace it on a large scale. Mining bitcoin consumes a lot of electricity. Bitcoin miners will make electricity production by African companies an explosive industry.
  • The coins you mine are not traceable: In other words, they are transaction free. This would work best for crypto traders in countries indifferent to crypto.

Read: Can Africa’s Bitcoin mining be boosted by solar power?

Cons of Bitcoin Mining in Africa

  • Firstly, some countries have restricted bitcoin trading and mining within their boundaries. Therefore, mining bitcoins in these countries is an illegal venture.
  • Bitcoin mining is expensive. It consumes a lot of electricity and the internet. That restricts interested parties who do not have enough capital to start mining.
  • Mining equipment requires frequent maintenance checks.
  • For mining to be profitable, it takes a lot of time.
  • Competition in bitcoin mining is higher.
  • Every four years, a bitcoin halving reduces mining earnings by half. This means that profits from mining continue to become less and less with time.

If the information stated above feels overwhelming, African institutions and individuals can decide to settle on buying bitcoin.

Pros of buying bitcoin in Africa

  • Buyers are only a click away from acquiring bitcoins through buying. If a trader has a bitcoin address, they can buy it on any verified platform.
  • No technical knowledge is required to buy bitcoin or any other cryptocurrency.
  • A trader has instant liquidity. If you want to sell, you can do so instantly.

Demerits of buying bitcoin in Africa

  • A trader is exposed to crypto volatility. A price decrease can send your investment capital plummeting.
  • The amount of bitcoin you buy will stay the same compared to mining. The one bitcoin you bought remains solely in the mercies of the market prices.

With the information above, African governments, institutions and individuals should venture into bitcoin mining sooner. If the African crypto ecosystem does not utilize the advantages of mining bitcoin, investors from foreign countries will fill in the gap and take a shot at a fortune from it.

The continent has decent speed in internet connection and limitless renewable energy sources that can sustain bitcoin mining in Africa.

Read: Ethereum mining; a beginner’s guide to get you started

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