Ethiopia Slashes Electricity to Crypto Miners Amid Drought-Strained Hydroelectric Supply
Ethiopia has dramatically cut back on electricity for Bitcoin-mining companies, reducing their power supply by around 75% due to a severe drought that's straining the country's hydroelectric reservoirs.
The move marks a significant setback for Ethiopia's rapidly expanding cryptocurrency-mining industry, which has attracted Chinese and other international mining companies with its abundant and relatively inexpensive hydropower. Much of the country's power generation comes from hydroelectric sources, including electricity associated with the Grand Ethiopian Renaissance Dam (GERD).
The industry has grown rapidly in recent years and now represents a substantial share of Ethiopia's electricity consumption. Bitcoin-mining companies accounted for approximately 35% of Ethiopian Electric Power Corp.'s revenue in the past financial year and consumed nearly one-third of the country's total electricity production, which stood at about 9,730 megawatts.
The immediate reason for the reduction is a decline in water availability. Ethiopia relies heavily on hydroelectricity, making its power system particularly vulnerable to changes in rainfall and water inflows. The El Niño weather phenomenon has intensified dry conditions, with water inflows into hydroelectric reservoirs reportedly falling by around 20%.