Business 4 April 2019Dennis Wafula
Crypto in Africa: Eatery accepts crypto, electricity rates hurt mining
Africa’s crypto community is still taking steps into the right direction. More people in Africa are opening up to the idea of making payments using digital currencies. However, it has not been easy for crypto miners in South Africa, who not only have to face the ongoing bear market, but also the high cost of electricity.
South Africa crypto miners suffer high electricity rates
The crypto mining industry in South Africa is not as profitable as it used to be, even with the recent rise in crypto prices. According to local reports, crypto miners will not be able to make any profits unless their electricity bill is subsidized. This is due to the recent changes in electricity pricing.
While commentating on the matter, Carel de Jager, a consultant at the Blockchain Academy, said , “It is not profitable to mine Bitcoin in South Africa at the moment if your electricity bill is not subsidized.”
Nersa, an energy regulator, granted power utility Eskom new tariff rates. These rates are expected to increase over the next three years. These include 9.41% or allowed revenue of R206.34 billion ($14.5 billion) for 2019/2020, 8.10% or allowed revenue of R221.8 billion ($15.5 billion) for 2020/2021, and 5.83% or allowed revenue of R233.1 billion ($16.4 billion) for 2021/2022.
Jager explains that on average, mining in South Africa produces 10% to 20% less than the operating costs at the current residential electricity prices. He adds:
“Since mining of crypto is completely dependent on the availability of electricity, load-shedding has also had a massive impact on mining farms. The power that a mining computer consumes is equivalent to that of a heater or air-conditioner, so installing renewable capacity to power these machines is very capital-intensive and in most cases infeasible.”
Jager believes that miners in South Africa will only be able to get profits from their operations if they apply for industrial electricity rates from Eskom or any other local municipality. Miners can also help by building plants near alternative energy producers.
Farzam Ehsani, the CEO and co-founder of VALR, stated the profitability of crypto mining generally comes down to four things. These include “the cost of energy a miner can secure, the “difficulty” level, which indicates how much hashing power (or how much other miners are mining), the efficiency of the mining equipment they are using, and the price of cryptos.
Despite the ongoing crypto winter, some miners in the country are still making a living in the industry. Ehsani adds that even with many being forced to shut down their mining computers, crypto mining remains a lucrative business.
Kenyan businesses accepting crypto payments
Business across the globe has opened up their business to utilize the potential that comes with crypto adoption. One businessperson in Nyeri, Kenya made history for being the first business to accept cryptocurrency as a mode of payments.
The woman, Betty Wambugu, runs a restaurant about 150km from the capital. Wambugu has allowed her customers to pay for services offered in her restaurant by using different cryptocurrencies.
In an interview, Wambugu stated that accepting cryptocurrency has helped many people to learn more about digital currencies and blockchain technology. She is using this opportunity to teach people the benefits that these new technologies have to offer. She explains that people are getting curious when they hear or see anything about cryptocurrencies. She then takes up the task of educating people on these new currencies.
She believes this mode of education is quite useful especially because she can use local languages to explain to communities.
Reportedly, since she began accepting this new mode of payments, she had received over Kshs. 40,000 ($400) in crypto. The average crypto transaction she makes in a day amounts to about Kshs. 500 ($5).
Last year, Healthland Spa in Nairobi began accepting Bitcoin Core (BTC) payments. Tony Mwongera, the chief executive at the Spa, explained that they decided to accept crypto payments to reduce theft in his business. He also acknowledges that it was much easy and faster for him to make purchases using cryptocurrencies.
Businesses and individuals in Kenya continue to venture in the crypto industry, even with various warns from the Central Bank of Kenya.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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