Ethiopia Slashes Bitcoin Mining Power by 77%, Why?

Ethiopia has sharply reduced electricity supplies to Bitcoin mining operations, cutting allocations to roughly 23% of contracted levels as falling water inflows put pressure on the country’s hydropower system.

According to a September 15 Bloomberg report, water flows into Ethiopia’s hydropower reservoirs have declined by around 20% as drought conditions worsen, with the El Niño weather pattern contributing to the strain. Ethiopian Electric Power (EEP) has responded by prioritizing households and industrial users while progressively reducing electricity supplied to Bitcoin miners.

EEP CEO Asheber Balcha said mining allocations had first been reduced from 75% of contracted volumes to 50%, before falling to about 23% at present. The utility plans to reassess conditions in October and could impose further reductions or limit electricity exports to neighboring countries if water shortages persist.

Bitcoin Mining Becomes a Major Power Consumer

The cuts underscore how heavily Ethiopia’s Bitcoin mining industry depends on the country’s hydropower resources.

Mining companies consumed roughly one-third of Ethiopia’s total electricity production of 9,730 megawatts, according to figures cited by Bloomberg. The industry also accounted for about 35% of EEP’s revenue during the previous financial year, making miners a significant source of income for the state-owned utility.

That relationship has created a delicate balance. Bitcoin mining has become an important commercial customer for Ethiopia’s power sector, while simultaneously emerging as one of its largest electricity consumers.

EEP has electricity purchase agreements with 39 Bitcoin mining companies, 31 of which have already begun operations. The contracts were designed to provide miners with at least 98% of their agreed electricity volumes, but declining water availability has forced the utility to cut deliveries well below those levels.

How Ethiopia Became a Bitcoin Mining Hub

Ethiopia was not a major Bitcoin mining destination just a few years ago. Its combination of inexpensive electricity and abundant hydropower, however, began attracting international mining operators after the government opened the door to what it describes as “data mining” and high-performance computing activities in 2022.

The country subsequently emerged as an increasingly attractive destination for miners looking for lower operating costs. Ethiopia has also explored broader opportunities in data centers and AI computing, signaling ambitions to use its electricity infrastructure beyond cryptocurrency mining.

A major part of that strategy has been the expansion of power-generation capacity. In September 2025, Ethiopia officially inaugurated the Grand Ethiopian Renaissance Dam, with a full generation capacity of 5,150 MW. The project, Africa’s largest hydropower development, forms part of the country’s broader effort to increase electricity generation, expand access and export surplus power to neighboring markets.

The current shortages highlight the other side of hydropower dependence: large generation capacity does not necessarily guarantee consistent electricity availability when reservoir levels come under pressure from drought and seasonal changes.

Mining Companies Continue to Invest

Ethiopia’s low-cost electricity has continued to attract major mining operators.

In January 2025, Abu Dhabi-listed Phoenix Group signed an agreement to purchase 80 MW of electricity in Ethiopia as part of its African expansion. The power was intended to support its Bitcoin mining operations in the country.

Phoenix subsequently announced an additional 52 MW of Bitcoin mining capacity in Ethiopia in April 2025, taking its operational capacity there to 132 MW and contributing to a global operating footprint of more than 500 MW.

The investments reflect the growing importance of cheap power to miners following Bitcoin’s 2024 halving, which reduced block rewards and increased pressure on operating margins. Lower electricity costs became even more valuable as miners faced a smaller Bitcoin reward for maintaining the network.

Ethiopia’s latest power restrictions introduce another consideration: how reliable that low-cost electricity remains when hydrological conditions deteriorate and domestic demand takes priority.

Bitcoin Mining Economics Face Additional Pressure

The electricity constraints arrive while Bitcoin miners are already navigating tougher economics.

Bitcoin’s halving mechanism cuts the block reward approximately every four years, reducing the amount of newly issued BTC miners receive for operating their infrastructure. Profitability therefore depends increasingly on several variables, including Bitcoin’s price, transaction fees, hardware efficiency and electricity costs.

Economist and The Bitcoin Standard author Saifedean Ammous has proposed that global electricity consumption and capital expenditure devoted to Bitcoin mining may have peaked around 2024–2025.

His argument is that the dollar value of newly mined Bitcoin faces structural pressure as block rewards decline, unless higher Bitcoin prices or substantially larger transaction fees offset the reduction in issuance. Ammous has also described the idea as testable rather than definitive, noting that sustained growth in transaction fees or renewed increases in network electricity consumption could alter the picture.

For miners, Ethiopia illustrates why electricity availability can be as important as electricity price. A cheap power contract offers limited protection when the underlying resource becomes constrained.

AI Offers Miners Another Revenue Stream

At the same time, some Bitcoin mining companies are looking beyond cryptocurrency and repurposing their power infrastructure for artificial intelligence and high-performance computing.

Mining operators often control sites with substantial electricity capacity, grid connections, data-center infrastructure and network connectivity. Those assets have become increasingly valuable as AI companies compete for access to the power and computing capacity required to train and run increasingly demanding models.

Reuters reported in 2024 that Bitcoin miners were already exploring AI and high-performance computing as an alternative business line, particularly as demand for data-center capacity increased competition for suitable power sites.

VanEck estimated in June 2026 that publicly listed mining companies faced a near-term funding gap of roughly $50 billion between their planned AI infrastructure investments and the financing available to execute those projects. The firm identified access to capital and timely project delivery as key factors determining miners’ ability to transition toward AI and computing infrastructure.

VanEck data also showed Bitcoin mining revenue falling about 26% year over year in May 2026 to approximately $1.12 billion, adding to the incentive for operators to diversify their businesses.

Cheap Power Is No Longer the Whole Equation

Ethiopia’s experience illustrates a broader shift in Bitcoin mining economics.

Low-cost hydropower helped turn the country into an increasingly important mining destination and made miners a major customer for its state-owned electricity provider. But the current reductions show that the value of cheap electricity depends partly on how reliably it can be supplied when climate conditions change and governments must balance competing demands.

For miners, the competition is therefore extending beyond electricity prices and machine efficiency. Access to stable, scalable power and adaptable infrastructure is becoming increasingly important.

With Bitcoin rewards continuing to decline, mining revenues under pressure and demand for AI computing accelerating, the infrastructure built for cryptocurrency mining could increasingly be valued for what else it can support—not just how much Bitcoin it can produce.