On May 23, 2018, Uganda hosted the first-ever African Blockchain Conference, and crypto-currency was among the discussion topics.
The Bank of Uganda warned Ugandans against holding and using cryptocurrencies, citing volatility and the inability of cryptocurrencies to operate as money. The late governor cautioned, "The bubble will burst, and Ugandans will lose their money."
However, President Museveni, at the conference, called for the bank to consider a "flexible and less-dogmatic" approach while dealing with cryptocurrencies. Banks, as centralized systems, are the backbone of our financial transactions. However, if not managed effectively, they can lead to systematic shocks, as we vividly remember from the 2008 financial crisis.
On the other hand, Bitcoin is a decentralized peer-to-peer payment network and the world's first cryptocurrency, emerging in 2009. It is designed to enable transactions without needing an intermediary, such as a bank, but rather a public ledger (a blockchain) that verifies and records all transactions, empowering individuals with direct control over their transactions.
Bitcoin is "mined" not by laborers in hard hats but by computers (miners) that record and validate Bitcoin transactions on the blockchain. This is how new Bitcoins are created. Mining Bitcoin consumes a lot of energy.
Human development is driven by affordable and accessible energy. Uganda is awash with energy resources, including solar, hydropower, biofuels, wind energy, and fossil fuels, which can and are being used all over the globe to promote sustainable energy and diversify revenue sources for governments and private investors.
Africa sits at the bottom of an energy chasm, "more energy is used by kitchen appliances in the US each year than all of the energy used by every person in Africa combined." In a 2020 case study of the State of the Global mini-grids market report, Uganda had installed 34 mini-grids that served 20,000 households. That constituted less than 1% of the country's 7.3 million households.
Mini-grids are small-scale electricity generators interconnected to a distribution network that supplies electricity to a small, localized group of customers, mostly in remote areas. Uganda's rural areas have few or no home appliances; electricity demand is too low to efficiently use the power generated by mini-grids, leaving "surplus/ wasted" energy." Bitcoin mining with mini-grids addresses the " wasted energy" issue by utilizing the grid's excess supply.
Gridless, a Bitcoin mining company in East Africa, co-locates Bitcoin miners with mini-grids, proving the miners' location-agnostic nature, meaning they can be placed anywhere. This sounds like a flexible approach to fusing Bitcoin mining and energy production in Africa.
As a disclaimer, this is not a mini-grid and Bitcoin parade but a few insights on sustainable ways of utilizing energy resources to advance digital and technology infrastructure.
EZ Blockchain is a company that converts one of the by-products of oil and gas mining (methane) into electricity to mine Bitcoin. Exxon Mobil mines Bitcoin as a part of its plans to reduce emissions. Uganda's oil and gas sector may explore such synergies to reduce emissions as part of the industry-wide effort to meet environmental demands.
As of 2022, 57.2% of Ugandans in urban areas had access to electricity, dropping to 10% in rural areas and only 22.1 % nationwide. With a 559 MW surplus, a GDP of 56,3 billion (2024), and less than 30% nationwide electricity coverage, Uganda stands to gain significantly from expansive and effective energy utilization. One way to do so is to participate in a flight to quality through mining Bitcoin, especially at excess energy centres.
This nuanced approach is gathering traction globally. Last month, Kenya signed a Memorandum of Understanding with Marathon Digital Holdings to monetize Kenya's underutilized energy resources. This partnership sets the foundation for leveraging Kenya's surplus energy for Bitcoin mining and technological development.
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On May 23, 2018, the price of one Bitcoin was $8,500, and this article was written with the price of one Bitcoin at $71,110 (a 737.65% price gain). Bitcoin and innovation are tools of the new world. At sixteen years old, Bitcoin is scarcer than gold and is the best-performing asset of the decade (2011- 2021) Uganda's lax approach towards harnessing innovation delays her arrival to this new world.
The underutilization of resources, especially energy and financial resources, in a globalized economy is catastrophic. Uganda should develop its power infrastructure to attain prosperity and pay attention to the winds of digital innovation.
A principle of energy conservation is that energy is neither created nor destroyed, it simply changes states. Uganda should change lest it is outstripped by technological advancement and digital innovation.
