Crypto Mining Boom Threatens Ethiopia's Power Supply

Ethiopia is grappling with significant power concerns as the country's cryptocurrency industry experiences a boom, particularly in crypto mining activities. The surge in crypto mining and data center operations is projected to consume a substantial portion of the nation's electricity supply, raising critical questions about energy allocation and consumption.

The Ethiopian Energy Outlook 2025 report highlights that electricity demands from crypto-related data centers are expected to exceed eight terawatt hours (TWh) this year, accounting for approximately 30% of the total national demand. This forecast has sparked debates about the appropriateness of such high energy usage, especially in a country where nearly half of the population still lacks access to reliable power supply.

The report, created by state-owned firms and the Petroleum and Energy Authority, underscores the tight balance between energy demand and supply. It questions whether the power used for crypto mining could be better utilized for other purposes, such as exporting electricity, general electrification, or supporting essential services like water pumping and agriculture, where diesel generators are widely used.

Despite numerous targets and large-scale infrastructure programs, Ethiopia has seen slower progress in electrifying the country. Under the National Electrification Program (NEF), about 2.2 million households were connected to the grid in the last five years, leading up to 2024. However, nearly 50% of the population still does not have access to reliable electricity, with only 22% having legal metered grid connections.

The slow expansion of electricity access has been identified as a significant factor hindering economic development. The report suggests that addressing this issue requires increased infrastructure investment and innovative solutions to extend energy access to underserved areas. Tariff and exchange rate reforms are expected to alleviate the lack of materials for electrification, one of the main barriers to progress.

Currently, the electricity distribution covers only 25% of Ethiopia’s land area, but about 68% of the population resides within five kilometers of the grid. This highlights the potential to triple the number of household connections within the existing grid footprint. Implementing cost-reflective tariffs will provide the Ethiopian Electric Utility (EEU) with resources for new connections, making widespread electrification more feasible.

Critics have urged the government to prioritize essential services over crypto mining activities. While Addis Ababa enjoys an electrification rate of about 93%, regions like Afar and Somali remain below 12%. There have been discussions about increasing electricity tariffs by up to 400% by 2028 under the new cost-reflective pricing regime under the NEP 3.0. Analysts expect this price increase to reduce crypto mining activities, which currently benefit from below-market power rates and favorable tax regulations.

Crypto mining offers direct foreign investment opportunities and taps into Ethiopia’s 98% renewable energy. However, critics argue that its expansion during the national electrification crisis could affect broader development goals. About 15 million households are still waiting for their first grid connections, highlighting the urgent need for a reassessment of energy allocation.

Ethiopia made a shift to embrace Bitcoin mining after the National Bank of Ethiopia banned crypto trading in 2022. The following year, the government started registering mining firms quietly through its cyber security agency, showing a move towards monetizing digital infrastructure. Critics argue that a country struggling to provide clinics with reliable electricity and farmers dependent on diesel pumps for irrigation should reassess its energy allocation priorities. They urge policymakers to consider the trade-offs between digital infrastructure growth and essential services.