Watt Matters Most? Ethiopia’s Fight Over Powering Bitcoin or People











Ethiopian Electric Power’s decision last week to freeze new cryptocurrency mining licences and begin phasing out existing operators has thrown one of Africa’s fastest-growing crypto hubs into uncertainty.

The move comes despite the sector delivering an estimated $220 million in foreign exchange earnings during the last fiscal year—vital hard currency in a country facing persistent forex shortages. Yet officials say the growing power demands of crypto miners now threaten national energy security.

A Market Ethiopia Built—And Now Wants to Slow

Just three years ago, Ethiopia was virtually absent from the global crypto mining map. Then, in the wake of China’s 2021 crackdown, dozens of operators displaced from Asia began scouring the world for cheap, stable electricity. Ethiopia’s low tariffs, pro-mining regulatory stance, and abundant hydropower made it a surprise contender.

By 2024, 25 licensed mining firms were active in the country, with another 20 pending approval. The scale-up was swift: EEP allocated 600 megawatts of capacity to the industry—about half of what it takes to power Addis Ababa.

EEP’s own earlier projections painted an even rosier picture. It forecast data mining revenues could reach 109 billion birr ($1.9 billion) annually by 2026 if the sector continued importing equipment at current rates.

But last week’s announcement shows a different calculation: the opportunity cost of powering server farms instead of homes and factories is now too high.

A Heavy Draw on the Grid

Crypto mining is inherently energy-hungry. In Ethiopia, the sector accounted for 27% of all electricity sales in the 2024/25 fiscal year—a figure that could approach 50% if pending licences were granted.

While mining firms insist they use only surplus generation, industry experts challenge that narrative.

“They are too power-intensive,” said Biniam Tufa, Deputy CEO at renewable energy company Green Scene. “These operations tap into capacity that could otherwise drive industrialization or rural electrification. The government underestimated the scale.”

The problem isn’t just generation—it’s distribution. Half the country’s population still lacks access to electricity, and frequent blackouts plague even major cities. Concentrating mining operations around Addis Ababa puts additional strain on the urban grid, forcing trade-offs between residential supply, industrial demand, and crypto mining loads.

Global Context: The Economics of Mining Migration

Ethiopia’s trajectory mirrors a broader global relocation of crypto mining. After China’s 2021 ban, Kazakhstan, Russia, and the U.S. became major destinations—only for each to face its own political or infrastructure challenges.

Kazakhstan saw miners consume 7% of national generation by late 2021, triggering rolling blackouts and a political backlash.

Russia embraced mining as a sanctions workaround but faced logistical bottlenecks.

The U.S., now the largest mining hub, is debating carbon taxes and local moratoriums to curb energy-intensive mining in states like Texas and New York.

Ethiopia entered the market as a low-cost outlier, offering one of the cheapest kWh rates globally. But like Kazakhstan, it is discovering the fragility of that advantage when energy demand growth outpaces infrastructure investment.

The Government’s Pivot

EEP CEO Asheber Balcha confirmed that tax holidays and other incentives for miners have been withdrawn.

“Low tariffs brought an influx of foreign operators, but the jobs they create are minimal compared to their electricity consumption,” Asheber said. “This conflicts with our mandate to power industrial and social development.”

The new approach:

Honor current contracts to avoid investor disputes

Halt issuance of new licences

Prioritize allocation to productive, job-rich sectors such as manufacturing and agro-processing

Miners Push Back

Industry players argue that the government risks undermining a nascent tech sector with global potential. They point to the foreign exchange benefits, investment inflows, and capacity-building in blockchain expertise and high-performance computing.

Some miners also claim their operations can stabilize the grid by consuming excess energy during low-demand periods and scaling back during peak demand. Critics counter that such flexibility is rarely enforced in practice.

GERD and the Off-Grid Proposal

The imminent inauguration of the Grand Ethiopian Renaissance Dam (GERD) is set to boost generation by several thousand megawatts. On paper, this could support both industrial growth and crypto mining.

But without rapid expansion of transmission and distribution infrastructure, much of this capacity could remain stranded power—generation that can’t be delivered to consumers.

Some energy analysts suggest a compromise: relocating mining operations to off-grid sites using mini-grids and containerized units. These could power nearby rural communities during peak hours and run mining rigs during off-peak periods.

Such models, already trialed in parts of West Africa, could help Ethiopia monetize surplus power without overloading the national grid. But profitability for miners would likely be lower than in grid-connected urban setups.

The Broader Energy Challenge

The mining debate underscores Ethiopia’s broader infrastructure bottlenecks. The country remains heavily reliant on imported power cables, transformers, and other hardware—slowing the pace at which generation gains translate into universal access.

As Biniam bluntly put it:

“Until we invest in the full electricity value chain—generation, transmission, and distribution—mining will be in direct competition with citizens for power.”

The Strategic Choice Ahead

For Ethiopia, the issue is less about the legitimacy of crypto mining and more about national priorities.

The calculus:

Short-term forex inflows vs. long-term industrialization

Serving global blockchain networks vs. expanding domestic electricity access

Betting on a volatile asset class vs. building a diversified, energy-powered economy

If Ethiopia chooses to prioritize homes and factories over server farms, it would join a growing list of countries recalibrating their stance on mining. But if it finds a way to balance the two—perhaps via off-grid innovation—it could still leverage its hydropower advantage while keeping the lights on for its people.