Bits of Bitcoin Research (BBR) - Issue #12
Mining Trends in Africa and Geopolitical Risks, Investor Sentiment, and Bitcoin Prices
Welcome to Issue #12 of Bits of Bitcoin Research, your curated guide to cutting-edge academic insights on Bitcoin.
In this issue, we first look at a report detailing Africa's emergence as a global Bitcoin mining hub. Next, we analyse how geopolitical risks and investor sentiment influence the price movements of Bitcoin and Ethereum.
Topics covered:
Africa's rise as a leader in sustainable Bitcoin mining via renewable energy and community-led models
The influence of geopolitical risks and investor sentiment on Bitcoin and Ethereum price movements
Let's dive into the papers.
Paper 1: Bitcoin Mining in Africa: Strategic Outlook (2025-2030)
African Bitcoiners. (2025). Bitcoin mining in Africa: A strategic outlook on energy, innovation, and sustainable development (2025-2030). https://bitcoiners.africa/bitcoin-mining-in-africa/
The African Bitcoiners have just published a comprehensive report that details how Africa is quickly establishing itself as a key player in Bitcoin mining, leveraging, among other things, the substantial untapped renewable energy resources. It provides an overview of the current state of Bitcoin mining in Africa, the challenges it faces, and an outlook up to 2030.
Key Insights:
Hashrate: Africa's mining industry experienced significant growth over the last years. It accounts for 3% of the global Bitcoin hashrate, with Ethiopia leading at 2.5% (could reach 7% by year-end).
Investment: The sector attracted over $1 billion in infrastructure investment across Africa in 2024.
Energy Economics: Ethiopia's mining costs are $1,986 per Bitcoin, compared to the highest cost country in the report, Ireland, at $321,112 (161 times more expensive. Electricity rates as low as $0.03/kWh offer a significant global competitive advantage.
Stranded Energy and Flared Gas: Africa's advantage lies in converting stranded renewable energy, such as unused hydro, solar, wind, and geothermal power, as well as flared gas, into Bitcoin. Miners can be located wherever this excess energy exists, aiding in funding new energy projects, reducing waste, and accelerating rural electrification.
Development Impact:
Ethiopia earned $55 million from electricity sales to miners over 10 months, projected to reach $123 million in 2025. Funds are being used to build transmission lines bringing power to the local population.
Mining operations are boosting rural electrification. In the DRC, mining increased hydro plant utilisation from 5% to 50%, reducing household tariffs from $0.35/kWh to $0.15/kWh. The facility provides full-time jobs and returns used for conservation efforts in Virunga National Park.
In Zambia and Malawi, mining sustains mini-grids and provides a crucial financial bridge for expanding electricity access.
Overall, Bitcoin mining in Africa supports infrastructure, job creation, conservation, and rural development.
Regulatory Evolution: Nigeria's ISA 2025 recognises cryptocurrencies as an asset class; South Africa classifies crypto assets as financial products under FAIS; Ethiopia allows mining under "data centre' licensing while maintaining transaction bans.
Challenges:
Although there is significant potential for Bitcoin miners to utilise otherwise wasted renewable energy sources, support infrastructure projects, and benefit local communities, challenges remain:
Regulatory uncertainty
Exposure to natural disasters or conflicts
Political instability
Operating in remote areas poses challenges such as logistics and internet connectivity
Hot climates, etc.
Future Outlook:
Lastly, the report projects future developments of the mining sector up to 2030:
Growth Projections: Middle East and Africa mining market are projected to grow at 5.7% CAGR through 2029.
HPC Computing: Africa to become dual-use digital infrastructure hub, with modern facilities combining Bitcoin mining and AI/high-performance computing to maximise
Infrastructure Development: Satellite internet expansion, particularly Starlink, will further facilitate data centres in rural areas, and advanced cooling solutions will be used to address hot climate challenges.
Regulatory Maturation: A more developed regulatory environment that provides more certainty for investments.
Community-Centric Models: A Bigger focus on Bitcoin mining that incorporates a positive community impact into their business model, driving local development.
Why Is It Relevant?
The report highlights that Africa is positioning itself as a global leader in sustainable Bitcoin mining while addressing development challenges. The continent's "shared value" ecosystem model, which links mining incentives with sustainable development goals, offers a scalable framework for responsible industry growth.
The convergence of abundant renewable energy, evolving supportive policies, and technological innovation positions Africa to become a hub for data centre infrastructure.
Although it can be a challenging environment to operate in, the continent offers numerous opportunities for Bitcoin miners and investors willing to invest the time and effort. Partnering with experienced miners in these environments can help mitigate risks.
Paper 2: Geopolitical Risks and Investor Sentiment in Cryptocurrency Markets
Mgadmi, N., & Erragcha, N. (2025). Cryptocurrencies in the Face of Geopolitical Shocks and Investor Sentiment. Available at SSRN: https://ssrn.com/abstract=5309692
This study investigates the impact of geopolitical risks and investor sentiment on the price dynamics of Bitcoin and Ethereum, utilising monthly data from December 2020 to April 2025. Through a series of cointegration and error correction models, the authors explore whether these external shocks help explain crypto market movements over both short- and long-term horizons.
Key Findings:
Structural Relationships: Bitcoin and Ethereum prices are cointegrated with the Investor Sentiment Index (ISI), the Cryptocurrency Market Sentiment Index (CMSI), and the Composite Geopolitical Risk Index (GPRI), confirming stable long-term relationships.
Adjustment Speeds: After a shock, prices adjust relatively quickly toward equilibrium. In the VECM model, Bitcoin corrects 74.51% and Ethereum 64.51% of deviations per period. The ECM model shows slower but still meaningful adjustments (23.41% for Bitcoin, 32.14% for Ethereum).
Short-Term Sensitivity: Monthly returns are significantly influenced by changes in sentiment and geopolitical risks, supporting the idea that crypto price movements during crises are not random but reflect measurable patterns.
Ethereum’s Higher Responsiveness: Ethereum displays stronger correlations with sentiment and geopolitical risk variables (e.g., GPRI: -0.7148 vs. Bitcoin: -0.0874), pointing to greater macro-sensitivity, likely due to its broader investor base and use-case diversity.
Methodology:
Data:
Monthly log-differenced prices of Bitcoin and Ethereum (CoinDesk, Yahoo Finance)
ISI from the U.S. Federal Reserve; CMSI and GPRI from Kaggle.com
Timeframe: December 2020 to April 2025
Econometric Approach:
Unit root tests (Dickey-Fuller 1979–1981, Perron 1998) confirm all series are I(1)
Structural break analysis identifies key regime shifts (COVID-19, Russia-Ukraine war, Hamas-Israel conflict)
Cointegration testing via Engle-Granger (1987) and Johansen (1990)
Error correction models (ECM, VECM) estimate short-term dynamics and long-run adjustment speeds
Descriptive statistics, variance-covariance, and Pearson correlations provide insights into volatility and interdependence
Study Limitations:
The authors note several constraints:
Composite indices may obscure more granular shifts in investor behaviour
Linear models may underestimate extreme dynamics during crises
Important crypto-specific drivers—like protocol changes or regulatory shocks—are not explicitly included
Future research should explore non-linear modelling and incorporate real-time, AI-derived sentiment data.
Why Is It Relevant?
This study provides investors and researchers with statistical evidence that the prices of Bitcoin and Ethereum are influenced by investor sentiment and geopolitical uncertainty. It adds empirical support to the idea that crypto markets exhibit structural relationships with exogenous global factors, even if those relationships don’t always follow intuitive patterns.
Ethereum’s stronger sensitivity to sentiment and geopolitical shocks also underscores its different risk profile relative to Bitcoin.
Overall, the findings suggest that even if a shock may lead to an immediate negative reaction the reversal back to trend happens relatively quickly.
Note: This is a working paper and has not been peer-reviewed. However, its findings align with related studies cited in the literature in the paper and with industry analyses such as Bitwise’s 2024 article on Bitcoin as a hedge against geopolitical risks. While Bitcoin may experiences an initial negative reaction to geopolitical shocks, prices typically recover quickly, often ending up higher than pre-shock levels over time. bitwiseinvestments.eu/blog/crypto-research/hedging-against-geopolitical-risks-25-07-2024
Wrapping Up
We have covered two distinct topics in this issue.
The African Bitcoiners' report illustrates how the continent is leveraging renewable energy and innovative approaches to establish itself as a global Bitcoin mining hub, driving sustainable development and reshaping the industry's geographical landscape.
Meanwhile, Mgadmi and Erragcha's econometric study provides statistical validation for patterns where Bitcoin and Ethereum respond to geopolitical risks and investor sentiment, with their models providing a statistical framework that explains documented patterns of market behaviour during crises.
I hope you found this issue insightful.
Until next time—don't trust, verify!