El Niño Dries Up Dams, Ethiopia Rationing Bitcoin Miners

In Ethiopia, Bitcoin miners come after households. Ethiopian Electric Power (EEP) has significantly reduced the electricity supplied to Bitcoin mining companies recently. Its CEO cites the decrease in water inflows to the dams and states that he wants to preserve the supply for residents and local industries. Here’s an explanation.

Key Points

• Ethiopia has cut electricity supply to its Bitcoin mining farms by three-quarters due to insufficient water inflows in its dams.
• Miners consumed nearly one-third of the country's 9,770 MW capacity and contributed 35% of Ethiopian Electric Power's revenues.
• The Grand Renaissance Dam (5,150 MW) relies on the kiremt rains, which are diminished by El Niño episodes.
• The Bitcoin network absorbs the cut through difficulty adjustments every 2,016 blocks, similar to the Kazakh disconnection of 2021-2022.

Ethiopia: Miners' Electricity Reduced by Three-Quarters

During a briefing on EEP's results at the end of August, CEO Ashebir Balcha stated that the company had reduced the electricity supply to mining companies by 75%. They would now receive about 23% of the volumes stipulated in their contracts. This percentage measures the electricity promised to companies, not their share of national production.

According to EEP, water inflows to the dams have decreased by at least 20%. The company links this situation to weather conditions associated with El Niño. It is particularly monitoring the Grand Renaissance Dam and the Gilgel Gibe III. As hydropower dominates its production, a drop in water levels reduces its maneuvering space.

EEP has lowered its production target by 10% for the 2026-2027 fiscal year. Ashebir Balcha prioritizes households and local industries over mining and electricity exports. However, the announced reduction does not mean that all farms have been shut down: the information released does not detail the affected sites or the actual power cut. Addis Ababa closely manages the country's energy resources, and miners could suffer from the situation -- Source: X Account

Bitcoin: A Profitable Activity, but Exposed to Dam Levels

Arbitrage has a cost for EEP. According to figures communicated to Addis Fortune, mining companies used 23% of its electricity, while generating 41% of its revenues in the last fiscal year. These accounts, which report 124.2 billion birrs (approximately 670 million euros) in revenues for EEP, have not yet been audited. About thirty data mining companies are believed to operate in the country.

Miners pay higher rates than domestic customers and bring in foreign currency. However, the $475.7 million in foreign currency revenues cited for the last fiscal year pertains to all of EEP: sources do not attribute them entirely to mining. The company estimates that the drought could reduce its revenues by about 3% and its foreign currency earnings by nearly 40%. These are forecasts, not losses already incurred.

The situation illustrates a limitation of the Ethiopian model: attractive hydropower for miners also depends on water inflows. EEP is developing solar and wind projects alongside its dams and plans to reassess the supply to miners when hydrological data becomes more precise. For now, the priority given to local consumption remains the line announced by its management, but that El Niño affects Bitcoin mining was unexpected!

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