Ethiopia cuts power to Bitcoin miners as El Niño strains hydropower

Ethiopia has cut electricity supplied to Bitcoin miners to 23% of contracted levels after a 20% drop in reservoir inflows strained the country’s hydropower system.

Bloomberg reported on Tuesday that El Niño had intensified dry conditions across the East African country, forcing state-owned Ethiopian Electric Power to reduce electricity supplied to mining operations while prioritizing households and manufacturers.

EEP CEO Ashebir Balcha said the utility initially lowered electricity deliveries to miners to 75% of their contracted amounts before reducing them to 50% and eventually 23%.

The company plans to reassess reservoir and electricity conditions in October. Further cuts remain possible if water levels do not improve, while Ethiopia could restrict electricity exports to neighboring countries if domestic supply comes under more pressure.

Bitcoin miners lose access to most contracted power

Bitcoin miners have become a large source of demand for Ethiopia’s electricity system after low-cost hydropower attracted operators looking for cheaper energy.

Mining companies consumed almost one-third of the country’s electricity output and generated 35% of EEP’s revenue during the previous fiscal year, according to Bloomberg. The latest restrictions therefore affect a customer group that has become financially important to the state power company.

Ethiopia’s mining expansion has been built largely around its hydroelectric resources. As crypto.news previously reported, miners were already consuming roughly 600 megawatts of electricity in October 2024, when the country had around 5,200 MW of installed generation capacity.

Hydropower supplied most of that capacity, with wind and thermal generation making up the remainder. Ethiopia subsequently expanded electricity generation around projects including the Grand Ethiopian Renaissance Dam while international miners increased their presence in the country.

The importance of Ethiopia to the mining sector was visible in updated research on Bitcoin’s energy mix. Cambridge data covered by crypto.news in August found that hydropower had overtaken natural gas as the largest reported source of electricity for Bitcoin mining. Cambridge researcher Alexander Neumueller partly attributed the change to better survey coverage in hydro-rich markets such as Ethiopia.

International operators have expanded capacity to take advantage of the country’s electricity supply. Abu Dhabi-listed Phoenix Group increased its Ethiopian Bitcoin mining capacity to 132 MW in April 2025 after adding a 52 MW facility to its existing operations.

Ethiopia power cuts arrive as mining economics weaken

The restrictions come as Bitcoin miners face pressure from lower mining rewards and a decline in the price of Bitcoin.

Saifedean Ammous, economist and author of The Bitcoin Standard, said in a Tuesday X post that worldwide Bitcoin mining electricity consumption and capital expenditure may have reached their peak during 2024 and 2025.

Under Bitcoin’s halving system, the block subsidy awarded to miners is reduced by half roughly every four years. The most recent halving in April 2024 cut the subsidy from 6.25 BTC to 3.125 BTC per block.

Ammous calculated that Bitcoin’s price would need to increase by more than 18.92% annually simply to keep the dollar value of newly mined Bitcoin increasing, before accounting for depreciation in the value of the dollar.

Bitcoin has instead lost more than 35% over the past 12 months, according to Yahoo Finance data cited in the report.

“Given this decline in mining rewards, it would be expected that bitcoin mining would slow down, or even contract,” Ammous said. “Unless there is a major turnaround in this metric, this trend may continue indefinitely.”

Pressure on mining revenue was already visible earlier this year. Miner revenue reached $1.086 billion in May, its highest monthly total since January, but Bitcoin mining economics remained under strain as hashprice fell nearly 18% over a month. Around $1.079 billion of May revenue came from the 3.125 BTC block subsidy, leaving transaction fees responsible for only a small portion.

By July, public miners had sold more than 32,000 BTC during the first quarter of 2026, exceeding their combined sales for all of 2025. Hashprice had fallen into the high-$20 range per petahash per day by midyear, below the roughly $35 breakeven level estimated for older mining machines.

AI data centers compete for miners’ electricity

Ammous identified artificial intelligence data centers as another factor that could change how mining companies use their electricity connections.

Mining operators already control power agreements, land, cooling systems and data center infrastructure that can potentially be repurposed for AI and high-performance computing. For some companies, those assets now offer another source of revenue when Bitcoin mining becomes less profitable.

The transition has accelerated during 2026. Public Bitcoin miners had secured more than $70 billion in AI and high-performance computing contracts by June, while companies sold more than 15,000 BTC from corporate treasuries and raised debt to finance data center expansion.

Spending has continued as operators build the infrastructure needed for AI workloads. Nine public Bitcoin miners spent $5.11 billion on capital assets during the first half of 2026 while directly reporting $341.2 million in AI and HPC revenue, according to an August analysis by BlocksBridge Consulting. AI and HPC revenue among the companies reached $205.8 million in the second quarter, up 52% from the previous three months.

CleanSpark provides one example of miners securing long-term AI revenue while continuing Bitcoin operations. The company reported a $239 million net loss for its fiscal third quarter as revenue fell 30.5% year over year to $138 million, while a 20-year lease for its Georgia AI data center is expected to generate $6.6 billion.

Citing VanEck data, Miner Weekly estimated in June that publicly traded miners could need around $50 billion to develop their planned AI infrastructure as companies redirect capital toward data centers.

Ammous described his view that Bitcoin mining electricity use and capital spending may have peaked as a testable hypothesis, leaving room for the trend to reverse. He said substantially higher Bitcoin transaction fees or a sustained recovery in mining electricity consumption above its previous peak would invalidate the hypothesis.