Ethiopia Cuts Bitcoin Mining Power Supply to 23% Due to Hydropower Shortage

Ethiopia's decision to cut power to Bitcoin miners highlights the fragility of energy-dependent industries amid climate-related disruptions.

• Ethiopia reduced electricity supply to Bitcoin miners to 23% of contracted levels on September 15, 2026, due to a hydropower shortage.
• El Niño conditions caused a 20% drop in reservoir inflows, straining the country's hydropower-dominated grid.
• Ethiopian Electric Power (EEP) prioritized residential and industrial users over mining operations, which previously consumed nearly one-third of national electricity output.

• Ethiopia's hydropower capacity has attracted international Bitcoin miners, with electricity costs averaging around 3.2 cents per kWh.
• Mining operations surged to approximately 600 MW consumption by late 2024, becoming a significant revenue source for EEP despite cryptocurrency trading being illegal domestically.
• El Niño exacerbated seasonal dry conditions across East Africa, leading to reduced inflows to key reservoirs and impacting overall energy availability.

On September 15, 2026, Ethiopian Electric Power (EEP) announced a drastic reduction in electricity allocations to Bitcoin miners, cutting supply to just 23% of contracted levels. This decision followed earlier reductions to 75% and then 50%, which failed to stabilize reservoir levels amid worsening conditions caused by the El Niño weather phenomenon. CEO Ashebir Balcha emphasized the need to safeguard electricity supply for residential and industrial users, as mining operations had become a significant drain on the national grid.

Bitcoin mining in Ethiopia had previously flourished, with miners consuming nearly one-third of the country's electricity output and generating 35% of EEP's revenue in the last fiscal year. However, the current hydropower crisis, driven by a 20% drop in reservoir inflows, has forced EEP to prioritize essential services over mining operations. The utility's power-purchase agreements typically commit to delivering at least 98% of contracted power under normal conditions, but the ongoing El Niño conditions have created a scenario where such commitments are no longer feasible.

The implications of this power cut extend beyond Ethiopia's borders. The global Bitcoin mining landscape is already under pressure following the April 2024 halving, which reduced block rewards and subsequently lowered hash prices. Additionally, competition for power infrastructure from AI data centers is intensifying, further squeezing the already tight energy market for cryptocurrency mining. As miners face increased operational costs and reduced profitability, the economic viability of mining in Ethiopia may come into question.

Looking ahead, EEP plans to reassess reservoir conditions in October 2026, which could lead to further cuts or restrictions on electricity exports to neighboring countries. This situation not only affects local miners but also international entities, particularly those linked to UAE-based firms like Abu Dhabi-listed Phoenix Group, which expanded its Ethiopian mining capacity to 132 MW by April 2025. Reduced allocations could significantly impact revenue and operations for these companies reliant on Ethiopian hydropower contracts.

• Bitcoin miners: Facing immediate operational challenges and increased costs due to reduced power supply.
• Local households and industries: Benefiting from prioritized electricity access but may experience higher energy prices.
• International investors: Particularly those linked to Ethiopian mining operations, who may see diminished returns.

• EEP's October reassessment: This will determine if further cuts are necessary, impacting both local and international mining operations.
• Global Bitcoin mining economics: Watch for shifts in profitability and operational viability as miners adapt to changing energy costs.
• AI data center competition: Increased demand for energy from AI infrastructure could further strain resources available for cryptocurrency mining.