Ethiopia Slashes Power Supply to Bitcoin Mining Operations by 77% Due to Hydroelectric Water Shortage
Amid a 20% decline in reservoir water levels, Ethiopia has reduced power distribution to Bitcoin mining facilities to just 23% of agreed-upon contractual amounts, according to recent reports, while industry analysts suggest global mining energy consumption may have reached its zenith.
According to recent reports, Ethiopia has dramatically decreased the amount of electrical power supplied to cryptocurrency mining operations, delivering only 23% of the contractually agreed-upon levels due to diminished water inflows affecting the nation's hydroelectric dam systems.
Bloomberg disclosed on Tuesday that the El Niño weather phenomenon has exacerbated drought conditions across the east African nation, causing a 20% reduction in water flowing into the country's hydroelectric reservoir systems. Ashebir Balcha, who serves as CEO of Ethiopian Electric Power (EEP), stated that the state utility has curtailed power allocation to cryptocurrency miners in order to give priority to residential consumers and manufacturing facilities.
According to Balcha's statements, EEP began the reduction process by cutting deliveries to 75% of contractual obligations, subsequently lowering allocations to 50%, and ultimately settling at the current 23% level. The utility company plans to reevaluate water and power conditions when October arrives and may implement additional reductions or potentially limit electricity exports to adjacent nations, the report indicates.
According to the report, cryptocurrency mining operations represented 35% of EEP's total revenue during the previous fiscal year and are consuming nearly one-third of the entire nation's electrical power generation. The country's low-cost hydroelectric power infrastructure has drawn international cryptocurrency mining companies, including Phoenix Group, which increased its mining operations in Ethiopia to a capacity of 132 megawatts as recently as April 2025.
Bitcoin mining power growth faces pressure from halvings and AI
In a separate development, Saifedean Ammous, an economist who authored The Bitcoin Standard, stated in a post on X published Tuesday that worldwide electricity consumption and capital investment in Bitcoin mining operations may have reached their maximum levels during the 2024 to 2025 period.
According to Ammous's analysis, Bitcoin's market price would need to increase by more than 18.92% annually simply to maintain growth in the dollar-denominated value of freshly minted coins, and this calculation doesn't even factor in the depreciation of the US dollar. The halving mechanism built into Bitcoin's protocol dictates that the quantity of Bitcoin awarded to miners for validating transactions is reduced by half approximately every four years.
Data from Yahoo Finance demonstrates that the price of the largest cryptocurrency by market capitalization has declined by more than 35% over the past 12 months.
Given this decline in mining rewards, it would be expected that bitcoin mining would slow down, or even contract. Unless there is a major turnaround in this metric, this trend may continue indefinitely.
Saifedean Ammous
Ammous also pointed to competitive pressure from artificial intelligence computing facilities, which offer mining companies an alternative method to generate revenue from their electrical connections and existing infrastructure. Using data from VanEck, Miner Weekly published an estimate in June suggesting that publicly traded mining companies could need approximately $50 billion to construct their proposed AI infrastructure projects, as deteriorating mining profitability encourages these firms to reallocate their resources.
Ammous characterized his analysis as a testable hypothesis, recognizing that significantly elevated transaction fees or a sustained price recovery pushing Bitcoin mining above its previous peak in electricity consumption could potentially disprove his conclusion.