Ethiopia, which has become a preferred destination for cryptocurrency miners thanks to its competitive hydroelectric rates, is facing an unprecedented energy crisis. Confronted with the climate impacts of the El Niño phenomenon, national utility company Ethiopian Electric Power (EEP) has taken the radical decision to slash the electricity supply allocated to mining farms by 75%. This drastic measure primarily aims to safeguard power supply for local households and industries, as water levels in reservoirs—particularly those of the Grand Ethiopian Renaissance Dam—suffer a significant drop.
The Ethiopian operator's business model is thus weakened by this reliance on hydropower resources. Although Bitcoin mining represents only a modest portion of total grid capacity, it had until now served as a substantial revenue source for EEP, generating a significant share of its annual income. Ethiopian authorities estimate that the ongoing drought could trigger a contraction of nearly 40% in foreign currency revenues, forcing the utility to lower its production targets for the coming financial years.
This situation highlights the structural risks associated with establishing energy-intensive data centers in regions vulnerable to climate hazards. While the Bitcoin network possesses an intrinsic ability to adapt through the automatic adjustment of its mining difficulty, companies operating in Ethiopia are facing a direct operational shock. Around thirty entities are currently affected by these restrictions, though the exact extent remains difficult to quantify precisely due to a lack of details regarding the targeted sites.
In response to this challenge, the Ethiopian government is now seeking to diversify its energy mix by accelerating the rollout of solar and wind power. This transition aims to reduce the country's vulnerability to hydropower dependence while re-evaluating the role of cryptocurrency miners within the national energy strategy. In the short term, Addis Ababa is prioritizing the resilience of public utilities, underscoring the growing tension between the country's digital appeal and the vital needs of its population during periods of climate stress.