Ethiopia Cuts Bitcoin Mining Power by 77% Amid Drought
Ethiopia has cut electricity supplied to Bitcoin mining farms to 23% of contracted levels, a 77% reduction, as an El Niño-related drought reduced reservoir inflows by 20% and strained hydropower generation. Ethiopian Electric Power introduced the cuts in stages, from 75% to 50% and then 23%, prioritising households and manufacturers. Bitcoin mining accounted for 35% of the utility’s revenue last fiscal year and consumed nearly one-third of national electricity output. The utility will review conditions in October and may impose further restrictions or reduce exports to neighbouring countries. Phoenix Group expanded its Ethiopian mining capacity to 132 megawatts in April 2025. The disruption highlights risks from climate-related power shortages, Bitcoin halving pressure and competition from AI data centres. Ethiopian miners could face lower production, higher operating costs and weaker profitability, while the global impact on Bitcoin is likely to remain limited.
Neutral
The immediate effect is negative for Ethiopian Bitcoin miners because electricity availability has fallen sharply, potentially reducing hashrate, production and miner revenue while raising operating costs. However, Ethiopia represents only a limited share of global Bitcoin mining, and the restrictions do not directly affect Bitcoin’s protocol, demand or network security. In the short term, traders may react to concerns about miner selling or a modest hashrate decline, but the global price impact is likely to be limited. In the longer term, repeated climate-related power shortages could encourage mining companies to diversify geographically or shift infrastructure towards AI data centres. These changes may affect mining economics and industry structure, but they are unlikely by themselves to create a sustained directional move in BTC.