South Africa becomes hub for mining cryptocurrencies


On this week’s episode of Marketplace Africa, CNN International meets the companies who have chosen South Africa as their hub for mining cryptocurrencies to understand why the country holds such appeal for this industry.

Host Eleni Giokos meets cryptocurrency miner Taqi Abughazaleh to find out what is involved in the mining process. Abughazaleh mines cryptocurrencies in his back yard; all he needs is electricity, a cooling system and the hardware, known as miners. The process in energy intensive and requires many miners to verify transactions, which is why he moved his operation from West Bank to Johannesburg, as electricity is more affordable in South Africa than in other destinations.

Although the value of cryptocurrencies, the top three being bitcoin, ethereum and ripple) is volatile, in March the value of bitcoin ranged from 8 000 dollars to 10 000 dollars, it can be highly profitable. Abughazaleh outlines how much money he makes each month by mining: “We are producing about 2 bitcoin every month and around 12 ethereum per month. [The amount of money we make] depends on the price, so let’s say if the price went up [and we made]40 000 dollars per month, we have to take off 5,000 dollars for electricity, so the rest would be 35 000 dollars profit every single month.”

It’s not just individuals like Abughazaleh who are trying to cash in on the booming digital currency market, many new companies in Africa are emerging due to the increased demand for exposure to cryptocurrencies, such as Affinity Mining. Greg van der Spuy, the company’s Director, tells the programme that his company is unfazed by the fluctuation of digital currencies, as he has confidence in the market: “There were days when we were seeing 30 to 40 percent fluctuations [in cryptocurrency value]but the market corrects.”

The cryptocurrency mined by people like Abughazaleh and Affinity Mining are then traded on platforms such as Luno. The programme meets Marcus Swanepoel, Luno’s CEO and Co-Founder, who outlines why such platforms are essential for those looking to invest: “We make it easy for people to buy, sell, store and use digital currencies. Some use it to buy things, but what we are seeing more of at the moment is people using it as an investment and store of value.”

Swanepoel tells the programme that Luno is the first platform of its kind in Africa, with over one million customers and it is aiming for one billion customers by 2025: “Our two biggest growth markets are South Africa and Nigeria. In South Africa, the banking infrastructure that we connect with is a lot more sophisticated… In Nigeria, some of these things don’t exist and we have to be smart about how we deliver our service to customers.”

Despite its instability, cryptocurrencies could play a significant part in African banks in the future, Farzam Ehsani, Blockchain Lead at Rand Merchant Bank, explains: “In Africa, there are many types of currencies and they’re not the most stable; the Nigeria Naira was more volatile than bitcoin last year… In the future, cryptocurrencies could play an alternative to some of the regimes that aren’t doing well.”

Central banks around the world are debating whether to formalise digital currencies, even though it is deemed as high risk. Ehsani describes what is happening in South Africa to facilitate this: “The South Africa central bank came out with an announcement four years ago about the fact that they’re experimenting with new tech and that they’re coming up with new regulatory framework in the next six months.”

Regardless of the risks associated with cryptocurrency, it’s clear that South Africa is fast becoming a hub for the industry.

CNN Marketplace Africa airs 23 March 2018 at 17:15 SAST on CNN International.


About Author

Bontle Moeng is the Founder and Managing Director of BizNis Africa. Moeng has spent 16 years working in the digital and online media industry across Africa. She applied her trade at True Love magazine prior to discovering her passion for Investment news in key sectors across Africa. Moeng previously worked for ITWeb, Starfish Mobile Technologies, ITNewsAfrica, AVATAR Agency, eNitiate, Global Interface Consulting and Havas Johannesburg. Her primary focus is to provide solid and valuable content on investment opportunities for the ICT, Energy and Mining sectors across Africa. In addition, the online news publication assists global companies to expand their presence in Africa. Email:

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