Ethiopia to Raise Energy Tariffs Amid Surge in Cryptocurrency Mining Demand

The demand for electricity from data centers involved in cryptocurrency mining in Ethiopia is expected to reach 30% of the country’s total consumption by 2025, amounting to 8 TWh. This information comes from a report published by the relevant governmental ministry.

In response to the increasing demand from miners, authorities have planned a reform of electricity tariffs. Over the next four years, electricity prices for businesses are set to rise by 400%, increasing from 2.12 birr to nearly 10 birr (approximately from $0.015 to $0.075) per kWh by 2028.

The report’s authors believe that this increase in tariffs may diminish investment incentives in the mining sector within the country. The new demand is placing additional pressure on an energy system that is already facing significant challenges.

Around 25% of the country’s generating capacity is currently idle due to a shortage of imported spare parts needed for repairs. Major industrial consumers, on average, experience 39 power outages monthly, lasting a total of 21 hours.

Interestingly, all electricity in Ethiopia’s national grid is entirely generated from renewable sources, predominantly through hydroelectric plants, with the Grand Ethiopian Renaissance Dam (GERD) being a central facility.

Progress in electrifying the population remains slow, with only 22% of households having legal access to the grid. Meanwhile, the government is promoting the transition to electric vehicles, aiming for them to comprise 28% of the nation’s vehicle fleet by 2030.

The authorities also plan to attract private investors for the construction of solar and wind power plants. In February 2025, the first auctions for independent producers with a total capacity of 225 MW were announced.

Africa is becoming a hub for outsourcing business processes due to low labor costs, a young English-speaking workforce, and government support. The sector in Ethiopia is projected to grow at a rate of 14% per year, nearly double the global average.

It is worth noting that a report from The Africa Report in December 2024 indicated that Bitcoin miners account for nearly one-fifth of all electricity sales revenue in Ethiopia.