Ethiopia has slashed electricity deliveries to Bitcoin miners to just 23% of contracted volumes as El Niño-driven drought strains the country’s hydroelectric reservoirs, according to a Bloomberg report, dealing a sharp blow to one of Africa’s largest mining hubs.
Ethiopian Electric Power CEO Ashebir Balcha said the utility cut power to miners to prioritize households and manufacturers after lower water inflows reduced reservoir levels by 20%. The reductions came in stages: EEP first lowered deliveries to 75% of contracted levels, then eased down to 50%, and has now settled at 23%.
The company will reassess conditions in October, Balcha said, warning that further reductions remain possible and that Ethiopia could even restrict electricity exports to neighboring countries if the hydrological situation does not improve.
## Miners prop up the grid, until the grid runs dry
The cuts land hard because Bitcoin mining has become a cornerstone of Ethiopia’s power economy. Miners accounted for approximately 35% of EEP’s revenue last fiscal year and consume almost one-third of the country’s total electricity output.
That dependence grew from Ethiopia’s unusually cheap hydropower, which attracted waves of international operators seeking low-cost energy after mining bans and tariff hikes pushed capacity out of other jurisdictions. Phoenix Group, the Abu Dhabi-listed miner, expanded its Ethiopian footprint to 132 megawatts in April 2025 and added a further 52 MW this year, part of a broader migration that made Ethiopia one of the fastest-growing mining destinations globally.
The logic of the grid, however, runs in only one direction when water runs short. Industrial customers with interruptible contracts, and miners sit at the very bottom of that priority stack, absorb the cuts first so residential and manufacturing demand can be met.
For miners operating on thin margins after Bitcoin’s more than 35% price decline over the past twelve months, a 77% power cut is effectively a forced shutdown of most deployed hardware. Machines idled by curtailment still carry hosting commitments, financing costs and hardware depreciation, and relocating equipment is a months-long logistics project with no guarantee of better terms elsewhere.
## Structural headwinds beyond the drought
The Ethiopian curtailment arrives amid a broader reassessment of mining economics. Economist Saifedean Ammous, author of The Bitcoin Standard, argued in a Tuesday post that global Bitcoin mining electricity consumption and capital expenditure may have already peaked in 2024 to 2025.
Under Bitcoin’s halving mechanism, the amount of BTC awarded to miners is cut in half roughly every four years, and Ammous calculated that Bitcoin’s price would need to rise more than 18.92% annually just to keep the dollar value of newly mined coins from shrinking, even before accounting for currency depreciation. With the price well below its highs, he suggested mining activity would be expected to slow or contract, and that the trend may continue indefinitely absent a major turnaround.
Competition for megawatts is intensifying from another direction entirely: artificial intelligence. AI data centers offer miners an alternative way to monetize power infrastructure and grid connections, and VanEck data cited by Miner Weekly in June estimated that public miners would need roughly 50 billion USD to build out their planned AI capacity as weak mining economics push them to diversify.
Ammous framed his thesis as a testable hypothesis, acknowledging that substantially higher transaction fees or a sustained recovery above Bitcoin’s previous electricity-consumption peak could invalidate it.
Analysts watching the region note that Ethiopia is not alone in recalibrating. Hydro-dependent mining jurisdictions across East Africa have faced tightening power budgets as climate variability stresses reservoir planning built on historical averages, and grid operators everywhere are renegotiating with data-intensive customers they once courted.
## What it means for the mining map
For now, Ethiopia’s October reassessment is the date to watch. A recovery in water inflows could restore some delivery levels, but another dry season would deepen the cuts and potentially idle the country’s mining sector entirely, removing a meaningful slice of global hashrate that migrated there precisely because its power was supposed to be abundant and cheap.
The episode is a reminder that mining’s energy arbitrage is only as durable as the hydrology and politics behind it. From curtailment in Ethiopia to exits in Michigan, operators are discovering that the cheapest electrons come with the least secure tenure, and that the grid always reclaims its power when scarcity bites.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
75% then 50% then 23% of contracted power. thats a controlled shutdown of ethiopian mining, not a curtailment
controlled shutdown is right. staged cuts from 75 to 50 to 23 give everyone time to find exits, kinder than one hard cutoff atleast
miners were 35% of EEP revenue last fiscal year and consume a third of total output. that revenue hole will hurt ethiopia more than the drought itself
exactly, and balcha said the october reassessment could bring even deeper cuts. expect some operations to relocate to paraguay
paraguay makes sense, itaipu surplus is real. question is whether the ethiopian rigs are even portable at this point or just get sold off cheap
itaipu rates are cheap sure, but moving older rigs across continents costs more than they are worth now. most of this fleet gets sold cheap
Shipping older rigs to Paraguay made sense at 6 cent power. At post-halving economics most of this fleet is scrap before the boats even dock.
reservoirs down 20 percent and miners still get 23 percent instead of zero. EEP knows who pays the bills, the october number is the one to watch
if they cut electricity exports to neighboring countries next this stops being a mining story and becomes a regional energy crisis. balcha hinted at it
kenya and djibouti deals are a big chunk of export revenue. if EEP touches those next the IMF conversations get very awkward
exports getting threatened is the real tell. balcha said the quiet part out loud, this stopped being a mining story weeks ago
cutting to 23% of contracted volumes after courting miners for years, classic. phoenix built out 132MW in ethiopia just to get rugged by a drought
tbf an el nino drought isnt exactly EEPs fault either. reassessing in october, nobody wins this one
132MW built on a contract now worth 23 percent of face value. no court makes EEP whole on that, those rigs are stranded assets
People miss that miners were about 35% of EEP revenue last fiscal year. Cut them off and the utility loses its best paying customer right when reservoirs are down 20%.
exactly, EEP just amputated its best paying customer base to protect households. brutal math but i understand the politics of it
35% of revenue and a third of total output. EEP is choosing between going broke and going dark, that october reassessment is gonna be tense
35 percent of revenue and they still pulled the trigger. says everything about how bad the reservoir math got, down 20 is not seasonal
phoenix isnt even the worst hit, every operator locked into contracted rates now worth nothing. renegotiate in october or ship the rigs to paraguay
23% of contracted power during el nino and they still expect miners to wait for october instead of leaving. sunk cost at a national scale
leaving is not that simple tho, those contracts have minimum offtake clauses. exiting early probably forfeits the cheap rates that made the build pencil out
el nino refill by october is doing a lot of work in every optimist take here. if the reservoirs dont recover the 23 percent becomes the new normal and the renegotiation never happens
october is also when el nino historically peaks, it doesnt fade. if inflows keep dropping even the 23 percent gets revised downward, miners should be pricing an exit now
pricing an exit is easy from a laptop in addis the actual constraint is customs. rigs sat 3 months in port last time eep shuffled contracts
phoenix added another 52MW THIS year after the staged cuts already started. someone in that abu dhabi office skipped the el nino memo
reservoirs down 20 percent and they still handed phoenix 52MW this year. the october reassessment is gonna be brutal
23 percent of contracted power and full price electricity exports still on the table for kenya and djibouti. miners were always the shock absorber here