Ethiopia Halts Power Supply to Bitcoin Miners Due to Hydropower Shortage

Ethiopia Faces Power Restrictions Due to El Niño and Reservoir Shortages

It has become clear that Ethiopia, located in East Africa, is implementing large-scale power supply restrictions due to severe strain on its hydropower systems.

The direct cause is the worsening drought in the country, exacerbated by the El Niño phenomenon, which has led to a 20 percent decrease in inflow to major hydropower reservoirs. The state-owned Ethiopian Electric Power (EEP) has significantly reduced power supply to cryptocurrency mining operators, who have consumed large amounts of electricity, to just 23 percent of their contracted amount in order to prioritize limited power for the public and domestic manufacturing.

According to EEP CEO Ashebir Balcha, the power supply restrictions have been gradually intensified, initially reduced to 75 percent of the contracted amount, then to 50 percent, and finally to a stringent level of 23 percent.

The company plans to reassess reservoir water levels and the overall power supply-demand balance in October. If no improvement is observed, further reductions in supply may occur, and there is also a possibility of restricting power exports to neighboring countries if the domestic power shortage worsens.

Impact on State-Owned Power Company’s Revenue and Miners

Ethiopia has attracted many Bitcoin mining companies from both domestic and international markets, leveraging its abundant and inexpensive hydropower energy sources.

Data from the previous fiscal year indicates that mining companies were a massive demand source, consuming about one-third of the country’s total power production, while also accounting for 35 percent of the state-owned power company’s overall revenue. Therefore, the tightening of regulations poses a significant impact on the operational foundation of the state-owned power company.

Mining Limitations Due to Halving and Deteriorating Market Conditions

In addition to the energy situation within Ethiopia, the economic environment surrounding the global cryptocurrency mining industry is rapidly deteriorating.

Economist and author Saifedean Ammous has suggested that the power consumption and capital investment in global Bitcoin mining may have already peaked between 2024 and 2025. The ongoing halving process, which reduces block rewards approximately every four years, coupled with recent market trends showing downward pressure on Bitcoin prices, further strains the profitability of mining operations.

Shift to AI Infrastructure and Future Outlook

As the economic appeal of Bitcoin mining diminishes, mining operators are rapidly transitioning their assets, such as power contracts, cooling systems, and large-scale data center infrastructure, to areas focused on AI (artificial intelligence) and HPC (high-performance computing).

Many public mining companies are selling off their assets to secure funding for AI infrastructure development, leading to new competitive relationships over power with AI data centers. The case of Ethiopia exemplifies a symbolic energy issue arising from the intersection of climate change impacts on renewable energy and a global trend shifting from cryptocurrency to AI infrastructure.

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