Translated with AI assistance
Ethiopia has sharply reduced electricity supplies to crypto miners due to a drop in water inflow at its hydroelectric power plants. Against the backdrop of El Niño, inflows into reservoirs have decreased by approximately 20%, and the state-owned Ethiopian Electric Power (EEP) has cut supplies to mining companies: first to 75% of the contracted volume, then to 50%, and now to roughly 23%. Priority is being given to industry and households.
The reason Ethiopia became a notable mining hub in the first place is its extremely cheap electricity. As shown in the Visual Capitalist infographic, the average cost of electricity for households in Ethiopia is about $0.006 per kWh – the second lowest figure among 145 countries, after Iran. For comparison: in China it is about $0.076, in India $0.077, in South Africa $0.204, and in Russia $0.068 per kWh.
But the energy cost of the mining boom is becoming increasingly apparent. According to an estimate cited by Business Insider Africa, mining a single bitcoin requires about 6.4 million kWh — as much as approximately 14,950 average Ethiopian households consume in a year. Meanwhile, around half of the country’s population still has no access to electricity.
Miners already consume almost a third of the country’s electricity and, over the past financial year, provided the state energy company Ethiopian Electric Power (EEP) with about 35% of its revenue. A significant share of this market is made up of Chinese companies, which were attracted to Ethiopia by low prices for hydroelectric power.
Will the situation affect global Bitcoin mining? Experts believe it will not. Although Ethiopia is Africa’s mining leader and ranks 8th on the global list of miners, its computing power accounts for about 2.4% of the worldwide total. The country became Africa’s main mining hub largely thanks to cheap hydropower and Chinese companies that relocated their operations there. A reduction in energy supply does not threaten Bitcoin’s operation, but it highlights the vulnerability of a model built on cheap yet climate-dependent electricity, and could accelerate the flow of new investment into other energy hubs.
