Ethiopian-Born Former Google Engineer Ventures into Bitcoin Mining in Ethiopia

QRB Labs ICT Solutions, a local company co-founded by Nemo Semret (PhD), a former Google engineer of Ethiopian origin, is in the process of establishing a Bitcoin mining site on the outskirts of Addis Ababa.

Awaiting clearance from the Information Network Security Agency (INSA) to import its equipment into Ethiopia, QRB has already initiated the construction of its mining site. Civil and electrical works are scheduled to be completed in early 2024.

QRB Labs, co-founded by four Ethiopian-origin entrepreneurs in 2021, specializes in providing data center services to international clients, with a focus on location-agnostic high-energy computations such as Bitcoin mining.

Its Bitcoin mining operation is organized within modular containers, facilitating easy scalability. Each module, housed in a shipping container, will be equipped with 100-300 high-power computers.

With power consumption expected to slowly grow to 150 megawatts in a few years, equivalent to that of a small city, QRB has entered into a special agreement with Ethiopian Electric Power (EEP) for the supply of electricity. The initial mining site is strategically located near an EEP substation to meet its high voltage demand, and future sites will be selected in partnership with EEP based on available excess capacity.

The company states it is procuring surplus hydroelectric power, commonly referred to as “stranded” energy, to operate the modular mining centers.

According to QRB, Ethiopia possesses a significant amount of stranded electric power due to various factors. These include the natural lag in transmission and distribution capacity growth compared to generation capacity, the slow development of industrial demand, seasonal variations in hydroelectric power due to water flow, and variable consumer and industrial demand based on the time of day and day of the week.

“We often focus on the cost of the Grand Ethiopian Renaissance (GERD) dam. However, the infrastructure required to transmit and distribute power to the whole country requires an investment for Ethiopia that may be equal to or greater than the cost of building GERD itself,” Nemo told Shega.

QRB anticipates becoming one of the largest customers of EEP. Unlike traditional customers, QRB has the flexibility to position its modular data centers near areas with excess electricity and to adjust demand by purchasing power during off-peak times.

Nemo explained, “Our data centers are modular, allowing us to easily relocate to new areas directed by EEP where stranded power is available. This relocation could occur as frequently as annually.”

Hiwot Eshetu, an official at EEP, confirmed ongoing discussions and an agreement with QRB Labs to Shega. However, he declined to provide further comments, directing the matter to the communications department.

QRB plans to invest approximately $40 million in hardware during the first four years of its operations. This investment will cover transformers, power distribution units, containers, server racks, and specialized computers with application-specific integrated circuits (ASICs).

Simultaneously, the company forecasts a cumulative revenue of $20 million in foreign currency from its operations in Ethiopia within the initial four years.

“By providing data center hosting services to foreign customers, QRB will earn revenue internationally, while its operational costs, such as electric power and salaries, are incurred domestically. Thus, it will have a net-positive impact on Ethiopia’s foreign currency balance of payments,” reads QRB’s proposal written for the Ethiopian government and read by Shega.

QRB will be self-financing in the initial stages, with plans to attract investment after a few years of operation.

The Legality of Bitcoin Mining in Ethiopia

The legal framework for Bitcoin is murky in Ethiopia, primarily concerning transactions, explains Nemo.

“As a company, we are not delving into the debate on why Bitcoin usage should be legal or attempting to do so. We are simply providing data center services and machines to Bitcoin miners outside of Ethiopia. You could say we are exporting data center services,” states Nemo.

QRB will offer hosting and colocation services, which include servers, data center space, internet connectivity, power, and all necessary infrastructure in secure facilities. Customers will have remote access to their servers via VPN, along with physical site access for the installation and maintenance of their servers.

Nemo mentions that QRB has already discussed agreements with some of the world’s largest Bitcoin mining companies interested in utilizing their services.

The former Google engineer states that QRB’s journey has been challenging, involving numerous back-and-forths. “The idea was first initiated in 2021. We had to convince officials at different institutions, with conversations with INSA being the most difficult,” said Nemo. He added, “Now we are in the final stages of obtaining clearance to import our hardware.”

QRB aims to hire and train Ethiopians in data center operations and software development, employing dozens of highly skilled workers early in its operations. To foster a robust ecosystem in Ethiopia, QRB plans to collaborate with institutions of higher learning, offer internships, and mentor technology startups.

The QRB Team

Nemo spent over eight years at Google, initially contributing to web search by working on ranking algorithms for several years. Subsequently, he served as a Tech Lead on Google’s Ad Exchange, leading the engineering team responsible for auction algorithms and mathematical optimization.

Additionally, Nemo is the co-founder of Gro Intelligence, an AI-powered platform that analyzes and forecasts models in food, climate, and agriculture. He has authored dozens of highly cited research publications and holds the title of inventor on nine US patents, with several more pending. Nemo earned a Ph.D. in Electrical Engineering from Columbia University.

Tessema Getachew, another co-founder of QRB Labs, also plays a key role in the company. Tessema is the founder and president of Zeneth, a company based in the U.S. that offers federal and commercial clients information technology and security services. A serial entrepreneur, Tessema has started and grown multiple successful businesses.

Untapped Potential

Nemo believes that Ethiopia has a unique opportunity to become a regional powerhouse in East Africa if it strategically leverages its advantages.

“The data related to the size of all Bitcoin transactions in history is only around 500 GB. Bitcoin mining requires high power, but its storage, internet bandwidth, and latency requirements are relatively low—less than the connectivity and bandwidth needed for streaming, for example,” he explains. “Ethiopia has abundant electricity that it is generating but not fully utilizing. Thus, it’s an ideal scenario, but it is vital that these services carefully focus on stranded energy. If the demand is in the wrong place and time, it can compete with consumer and industrial demands and risk overloading the grid rather than helping it develop,” he added.

Nemo also identifies another emerging field where Ethiopia can leverage its unique position – the training of AI models. “AI model training is conducted on computers similar to those used in Bitcoin mining, which have high computing power. While their energy demand is high, the data from their training is not sent live. Training AI models is something that can happen in Ethiopia,” he added.

According to Yesukal Haileyesus Kassa, better known as Kal Kassa, Bitcoin enthusiast and founder of BitcoinBirr, there is a growing interest from mining companies in Ethiopia, including those from Russia and China. Just last week, BitCluster, a Russian bitcoin mining company, announced its plans to construct a 120 MW data center in Ethiopia. The facility is situated in Addis Ababa, the capital of Ethiopia, within the territory of the Kilinto high-voltage substation.

In a press release, the company stated that the commissioning of the new data center is scheduled for January 2024, with the transformers currently in the process of being connected.

“Bitcoin provides Ethiopians with a novel approach to financial freedom. Both as a money and as a technology, this open-source protocol allows users an unprecedented amount of sovereignty,” Kal told Shega.

“I look forward to seeing my fellow Ethiopians continue in learning about decentralized technology and adding value via bitcoin-mining facilities utilizing renewable energy in Ethiopia,” he added.