This is an opinion edit by Emeka UgbaRwanda-based host of the “Bitcoin This Blockchain That” podcast.
Imagine you’re drinking a café mocha at a coffee shop in Lower Manhattan. Then you hear this African guy say he’s a bitcoin miner. Pretty soon you’ll probably get a better glimpse of the bro as he thinks he’s one of them — slipping into DM and promising his tantalizing ROI if you invest in a Bitcoin mining scheme Imposter: He’s probably not legal.
Yes, I’m Nigerian, but if I was in the booth with you, I would probably feel the same way.
We all know that Nigeria is considered the African country with the highest rate of Bitcoin and cryptocurrency adoption. But given Bitcoin’s proof-of-work consensus mechanism and how dependent it is on electricity, and the fact that Nigeria is not a reliable choice for cheap and stable electricity, it’s hard to imagine. Considerable hash power can emanate from the country.
So, in fact, it’s probably correct to think that fellow is not legitimate. But should you?
Obstacles to Mining Bitcoin in Nigeria
lack of reliable power
Nigeria is the 14th largest land-based country in Africa, with a population of over 200 million people, approximately 52% of whom live in urban areas. It’s disconcerting to learn that these people have to rely on her depressing 4,000 megawatts that the country’s power grid manages to generate.
I use the adjective “depressing” because that is the reality of the state’s power situation. Homes and businesses, from small to large facilities, are often forced to secure alternative power sources. Or you risk staying in the dark until power is restored, shutting down operations. From gasoline and diesel generators to solar power, these alternative power sources should act as auxiliary power sources in typical scenarios. However, in the case of Nigeria, they have now become a major power source for many in the country.
As such, it is highly unlikely that Bitcoin mining will succeed domestically. But it — Nigeria certainly contributes to Bitcoin’s global hash rate.
An unclear and borderline hostile regulatory environment
Similar to nation-states, Nigeria’s stance on bitcoin and cryptocurrencies is somewhat belligerent.
On the fateful Friday of February 5, 2021, the apex bank, the Central Bank of Nigeria (CBN), issued a statement warning all financial service providers to stop trading in Bitcoin or cryptocurrencies. I remember that vividly. The warning didn’t end there. Banks were also instructed to freeze accounts belonging to individuals or entities that previously used the bank’s infrastructure as an entry or exit to cryptocurrency exchanges.
Many accounts were subsequently frozen in accordance with the directive, forcing Nigerians to increasingly adopt peer-to-peer value exchange systems. Person-to-person without the need for a trusted third party.
Despite the fact that the Nigerian Securities and Exchange Commission (SEC) has recently issued some regulations that appear to be somewhat less hawkish for digital assets, what is the regulator’s stance on mining? As for what to take, especially minor (better term) “print money”.
resilience among enemies
Some of the first things that come to mind when many people think of Nigerians aren’t confidence-inspiring, but there are a lot of things that Nigerians are known for, which are great.
Nevertheless, many also know that Nigerians are able to survive and even thrive in the harshest conditions. is.
As a Nigerian, I can attest to this resilience. We have this innate ability to adjust and adapt to almost any condition, almost anywhere. At this point in the conversation, the fact that there are Nigerians out there blaming the debilitating odds of challenging bitcoin mining isn’t all that surprising, is it?
It is difficult to determine exactly when the first Nigeria-based ASIC was connected to the Bitcoin network. Yes, I know that the hash rate generated from the country may not be as great as the blip or pulse in the network. As a matter of fact, Africa as a whole contributes less than 0.2% of him to the global Bitcoin hashrate, according to a much-discussed data source. However, the innovative efforts Nigerian miners are making to ensure the most decentralized and censorship-resistant monetary system in the world should not go unnoticed.
Nigerian Bitcoin Miner Story
When I started researching this topic, I had the pleasure of getting in touch with several individuals mining bitcoin in Nigeria. For security reasons bordering on the hostile regulatory environment I mentioned earlier, they chose to remain anonymous. We will refer to them by their pseudonyms because of our choice.
The first individual, let’s call him Cora. Bitcoin He Kola, who is relatively new to mining, began his journey in September 2021 with only his Antminer S9. This is what he bought for $500 from about $450 at the time. According to him, he decided to try his hand at mining with that one ASIC, but then expanded and acquired his other seven ASICs. These are all Innosilicon T2TH he bought all from China as used miners and shipped to Nigeria. Then, not to leave much room for questioning from the authorities, especially considering the fact that he is importing a “money printing” machine, the ASIC is the computer his graphics his processing unit (GPU). ) was cleared at customs.
Korra chose not to disclose his location, but said his business is somewhere in the north-central part of the country near the country’s hydroelectric power plants. Because it’s cheap, Kola keeps his electricity bills to $15 to $20 a month to run his business. However, seeing that the “Nigerian factor” was still in play, he said he was getting from 20 to 22 hours of electricity per day. That his reliance on only one power source means he is exposed to 4 hours of outages from 2 hours each day.
Now, here’s another interesting point. Due to unclear regulatory conditions and local power authorities, Kola’s mining operations have been written off as facilities housing servers for cloud storage rental services. Interesting.
I had a long conversation with Cora, so I can go into detail about everything we talked about, but this article is not just about conversations with him, so I’ll end it here.
The second individual is now a more experienced Bitcoin prev and has been in the field considerably longer than Cora. Let’s call him Benga. He requested me to keep a lot of the things he shared with me off the record about his setup.
Bought a few Antminer S9 ASICs, all “used” and imported from China as computer GPUs, Gbenga’s offices are located on the outskirts of Lagos, the country’s largest business hub. Much like Kola, Gbenga started his mining venture with far fewer ASICs than he does today. He has expanded exponentially as he is the bigger player in the field.
Gbenga’s setup is one of many businesses in the country that rely on alternative power sources for power. In his case it is a 200 KVA diesel generator. Now, in an ideal situation, domestic diesel costs a little over $1 per liter at the time of this writing, and his operation takes into account the fact that he exceeds 300 liters per liter. When you think about it, this is not a wise adventure. On average he spends a day, or about half a day on days powered from the grid. But Gbenga has partnered with big names in the oil and gas industry, so you can get diesel for far less than what you can get on the open market.
According to Gbenga, his main challenge was the constant need to maintain and repair the ASICs, as power-related problems often occur due to unstable power supplies. However, he has a team of seasoned engineers and electricians recruited from a local talent pool and initially had no experience working with his ASICs, but he has a strong background in Bitcoin mining and his Gbenga. As a result of my work, I learned the necessary skills.
The Future of Bitcoin Mining in Nigeria
There are many other Bitcoin miners in Nigeria. Many of them were reluctant to talk to me because they were worried about their safety. And for good reason. But that doesn’t mean there aren’t big companies that have already entered the mining space or are researching ways to enter.
We may still be a long way from Africa, which contributes to the majority of the world’s Bitcoin hashrate, but like everything else in Nigeria and across Africa, as well as individuals like Gbenga and Kola. , is becoming increasingly popular. Given Bitcoin’s value on the continent, it may not be too far into the future.
The biggest challenge facing all is funding. We all know how difficult it is to get a loan in the traditional financial space, especially in Nigeria. You need to know someone who knows someone. However, from the telecommunications sector to banks to restaurant chains, companies and large corporations with massive power outages due to the need to keep their facilities running 24 hours a day, the moment they realized what Bitcoin was, the Playground will definitely look different. Encouraging the use of stranded electricity and transforming it into a stored value asset with deflationary supply using proof of work protocols to generate asymmetric returns.
Guest post by Emeka UgbaOpinions expressed are entirely our own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Nigerian Bitcoin Miners Profit – Bitcoin Magazine
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