Ethiopia Slashes Bitcoin Miner Power Supply Amid Water Shortages

Ethiopia has drastically reduced its power supply to Bitcoin miners by 75% due to falling water levels in hydropower reservoirs. The move is intended to prioritize electricity for households and manufacturers amid worsening water shortages, according to Ashebir Balcha, CEO of Ethiopian Electric Power (EEP).

The reduction was announced as EEP seeks to allocate its limited power supply more effectively, with around half of the country's population still lacking access to electricity. The scale of Bitcoin mining's electricity consumption has raised questions about how Ethiopia should allocate its resources.

Bitcoin-mining companies accounted for 35% of EEP's revenue in the past financial year and consumed nearly one-third of Ethiopia's total electricity production, according to figures cited by Bloomberg. However, with water inflows into hydroelectric reservoirs having fallen by about 20%, the utility had no choice but to reduce supply to energy-intensive mining operations.

The move comes less than a year after Ethiopia emerged as one of the world's major destinations for Bitcoin miners, attracted by its relatively low electricity costs and growing generation capacity. Mining a single Bitcoin in Ethiopia requires approximately 6.4 million kilowatt-hours of electricity, equivalent to the annual consumption of 14,950 average Ethiopian households.

EEP plans to reassess the situation in October and may further reduce electricity supplied to Bitcoin miners if water levels remain under pressure. The decision puts the government in a balancing act between foreign-currency opportunities associated with Bitcoin mining and the need to maintain electricity supplies for households and industries.