El Niño Drought Hits Ethiopia's Bitcoin Mining Industry
El Niño's impact on Ethiopia's hydroelectric power has led to a drastic reduction in electricity supply for Bitcoin mining companies. According to Ethiopian Electric Power (EEP) CEO Ashebir Balcha, the company has cut off nearly three-quarters of the electricity allocated to these farms, leaving them with only 23% of their contracted volumes. This decision was made due to the significant decrease in water inflows to the dams, particularly the Grand Renaissance Dam and Gilgel Gibe III.
The reduction in electricity supply will undoubtedly affect the operations of Bitcoin mining companies in Ethiopia, which have been a significant contributor to EEP's revenues. In fact, these companies used 23% of the country's 9,770 MW capacity and generated 41% of EEP's revenues in the last fiscal year.
While the company estimates that the drought could reduce its revenues by about 3% and foreign currency earnings by nearly 40%, it prioritizes households and local industries over mining and electricity exports. As a result, Bitcoin miners may suffer from this situation, which highlights the limitations of Ethiopia's model relying heavily on hydropower for mining operations.