Ethiopian authorities have reportedly scaled back the electrical supply provided to Bitcoin operators down to 23% of agreed-upon amounts because dwindling water levels are straining local hydroelectric facilities.
On Tuesday, Bloomberg reported that El Niño has exacerbated arid conditions throughout the East African nation, causing a 20% drop in reservoir water levels. Ashebir Balcha, CEO of Ethiopian Electric Power (EEP), explained that the company curtailed electricity allocations to miners in order to prioritize residential homes and industrial manufacturers.
Balcha stated that EEP initially lowered deliveries to 75% of contracted volumes, later tightening restrictions to 50% and subsequently to 23%. According to the publication, the organization will re-evaluate the situation in October and might introduce additional cutbacks or even halt power exports to neighboring countries.
Reports indicate that Bitcoin miners represented 35% of EEP’s income during the preceding fiscal year and utilize nearly one-third of the total electricity generated in Ethiopia. The nation’s affordable hydroelectric power has drawn international mining firms, including Phoenix Group, which expanded its Ethiopian mining capacity to 132 megawatts back in April 2025.
Bitcoin mining power growth faces pressure from halvings and AI
In a separate development, economist and author of The Bitcoin Standard Saifedean Ammous stated in a Tuesday post on X that worldwide electricity usage and capital expenditures for Bitcoin mining likely reached their peak between 2024 and 2025.
Ammous noted that Bitcoin prices would need to climb by more than 18.92% annually simply to sustain growth in the dollar value of newly minted coins, even before factoring in currency depreciation. Under the protocol’s halving mechanism, the reward given to miners is cut in half approximately every four years.
Figures from Yahoo Finance data show that the valuation of the premier cryptocurrency by market capitalization has dropped by over 35% across the past 12 months.
“Given this decline in mining rewards, it would be expected that bitcoin mining would slow down, or even contract,” Ammous remarked. “Unless there is a major turnaround in this metric, this trend may continue indefinitely.”
Related: Bitcoin miner Phoenix Group adds 52 MW of mining capacity in Ethiopia
He also pointed to competition originating from artificial intelligence data centers, which offers miners an alternate avenue to monetize their power agreements and physical infrastructure. Citing statistics from VanEck, Miner Weekly estimated in June that public miners might require approximately $50 billion to build out their projected AI infrastructure as deteriorating mining profitability prompts firms to shift resources.
Ammous framed his conclusion as a testable hypothesis, noting that significantly higher transaction fees or a persistent rebound past the prior peak in Bitcoin mining electricity consumption could disprove it.
Magazine: AI may already use more power than Bitcoin — and it threatens Bitcoin mining
Originally published at https://cointelegraph.com/news/ethiopia-bitcoin-mining-power-cut-hydro-shortage?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
