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Ethiopia has slashed electricity to Bitcoin miners by 75% as falling water levels squeeze the country’s hydropower-dependent grid, Ethiopian Electric Power confirmed September 15. The cut hits an industry that consumes nearly a third of Ethiopia’s total power output, in a country where half the population still lacks electricity access.
The immediate cause of the electricity reduction is declining water availability at Ethiopia’s hydroelectric reservoirs.
Water inflows into the reservoirs have fallen by about 20% as dry conditions intensify, putting pressure on a power system heavily dependent on hydropower. The situation has forced Ethiopian Electric Power to reduce supplies to energy-intensive mining facilities while attempting to preserve electricity for households and manufacturers.
EEP Chief Executive Officer Ashebir Balcha confirmed that the utility had reduced electricity supplied to Bitcoin miners in response to the worsening conditions.
“[EEP] had committed to supplying at least 98% of contracted power,” the report states, highlighting the scale of the adjustment from the arrangements previously made between the utility and mining companies.
The reduction marks a significant change for Ethiopia Bitcoin mining operators, who have benefited from access to comparatively inexpensive electricity. Electricity in Ethiopia costs around 3.2 cents per kilowatt-hour, making the country an attractive destination for companies operating energy-intensive cryptocurrency mining equipment.
Much of the country’s electricity comes from hydropower, including surplus capacity associated with the Grand Ethiopian Renaissance Dam.
The energy requirements of cryptocurrency mining have become increasingly important as the industry expands in Ethiopia.
Bitcoin-mining companies accounted for 35% of Ethiopian Electric Power Corp’s revenue in the past financial year, according to the report. However, the sector also consumed almost one-third of the country’s total electricity production.
The scale of that consumption becomes clearer when individual Bitcoin production is considered. Mining a single Bitcoin in Ethiopia requires an estimated 6.4 million kilowatt-hours of electricity.
That amount is equivalent to the annual electricity consumption of approximately 14,950 average Ethiopian households.
The figures illustrate the substantial energy requirements associated with Ethiopia Bitcoin mining and explain why the industry has become part of the country’s wider electricity-allocation debate.
The sector has expanded rapidly since Ethiopia opened its doors to international cryptocurrency miners. The country has become a significant mining destination in Africa, with Chinese operators among the companies attracted by its inexpensive hydropower.
However, the industry’s expansion has also created questions about whether electricity should be directed toward mining when millions of Ethiopians remain without reliable access to basic power.
Ethiopian Electric Power currently has power-purchase agreements with 39 Bitcoin-mining companies, of which 31 are operational.
Under the agreements, the utility had committed to providing miners with at least 98% of their contracted electricity. The latest 75% reduction represents a substantial departure from those arrangements as authorities respond to the country’s worsening hydropower conditions.
The utility plans to reassess the situation by October.
That review could determine whether Ethiopia Bitcoin mining companies receive additional electricity reductions or whether supply conditions improve sufficiently for restrictions to be eased.
Authorities could also limit electricity exports to neighboring countries if water levels remain under pressure. The potential measures reflect the broader challenge facing Ethiopia’s power sector as it balances domestic demand, industrial activity, electricity exports and cryptocurrency mining.
For miners, the uncertainty could affect operations and the economics of running energy-intensive facilities in the country. For Ethiopian authorities, meanwhile, the issue is increasingly tied to how scarce hydropower resources should be distributed during periods of reduced generation.
Ethiopia’s decision highlights the dependence of its cryptocurrency-mining industry on the country’s hydropower system.
The same inexpensive renewable electricity that helped transform Ethiopia into an attractive mining destination is now being constrained by unfavorable weather conditions. With reservoir inflows falling and domestic electricity needs remaining high, the government faces competing demands for available generation.
The situation also underscores the importance of Ethiopia Bitcoin mining to the country’s electricity market. While miners have generated significant revenue for Ethiopian Electric Power, their consumption represents a substantial share of national electricity production.
The coming reassessment in October could therefore be significant for the industry’s future operating conditions.
If water levels remain low, miners could face further restrictions alongside possible limits on electricity exports. If hydropower availability improves, authorities could potentially reconsider the current reductions.
For now, Ethiopia Bitcoin mining companies are operating under tighter electricity constraints as the country responds to a hydropower shortage and seeks to protect electricity supplies for households and other parts of the economy.SEO tags: Ethiopia, Bitcoin, Mining, Hydropower, Electricity, Crypto, Energy, Blockchain, ElNino, Africa, Reservoirs, BitcoinMining
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