Ethiopia limits bitcoin miners to 23% of their electricity

Ethiopian Electric Power (EEP) is now supplying bitcoin mining companies with only about 23% of the electricity stipulated in their contracts. The state-owned company cites reduced water inflows to its dams and prioritizes supplying households and industrial activities.

According to EEP, water inflows to hydroelectric reservoirs have decreased by approximately 20% during a dry season exacerbated by El Niño. Contracts with mining companies originally guaranteed at least 98% of the agreed volumes. CEO Ashebir Balcha explained that the supply was first reduced to 75%, then to 50%, before dropping to around 23%.

This reduction impacts a sector that has become one of EEP’s main clients. Data presented during the company’s annual review indicated that data mining activities accounted for about one-third of the electricity consumed and a significant portion of its revenue. Ethiopian Business Review estimates their payments at 50.37 billion birrs for the last fiscal year.

Ethiopia’s reliance on hydroelectric power amplifies the effects of declining water levels. EEP currently has a hydroelectric capacity of 9,213 MW, compared to 504 MW for wind and 7.3 MW for geothermal energy. The company had previously indicated that data mining activities were an important source of foreign currency.

EEP has signed power purchase agreements with 39 bitcoin mining companies, of which 31 are already operational, according to data reported by Bloomberg. Ethiopia has attracted these operators with relatively cheap hydroelectric power, even though cryptocurrency trading remains banned in the country.

The drought is also affecting the public utility’s foreign revenue. EEP has cut its electricity export revenue forecast for the current fiscal year by 40%, down to 279 million dollars, according to Bloomberg.

If water inflows remain insufficient, EEP may further reduce the supply to mining companies and limit certain electricity exports to neighboring countries. Ashebir Balcha stated that this allocation would be reassessed in October.