Ethiopia, a country striving to modernize its economy, may be heading toward a severe energy crisis as crypto mining threatens to consume nearly one-third of its total electricity supply by 2025.
Crypto Mining’s Rising Demand Threatens Power Stability
According to new projections, cryptocurrency mining and data centers in Ethiopia are on track to consume over 8 terawatt-hours of electricity within the next year. That’s 30% of the nation’s total electricity generation, sparking concern among experts and citizens alike.
While crypto operations were initially welcomed as a tool to attract foreign investment and stimulate digital infrastructure, their massive energy demands now outweigh the perceived benefits. Kuwait, for example, recently banned mining altogether, citing similar concerns.
A Country Struggling to Power Its People
Despite Ethiopia’s large-scale energy infrastructure plans, electrification is still crawling at a slow pace. Only 2.2 million households have been connected to the power grid over the past five years, with nearly half the population lacking reliable access to electricity. Even worse, just 22% of homes have legal, metered electricity connections.
While the capital, Addis Ababa, boasts a 93% electrification rate, many other regions lag far behind. In Afar and Somali regions, the rate plummets to under 12%, underscoring a stark urban-rural energy divide.
Legal Conflicts and Quiet Registrations
Adding complexity to the issue is Ethiopia’s regulatory inconsistency. In 2022, the National Bank of Ethiopia banned cryptocurrency trading, citing concerns over financial stability. Yet, just a year later, the government quietly began registering mining companies through the Information Network Security Agency (INSA).
This backdoor strategy to legalize and regulate mining operations has sparked confusion and controversy, especially given the country’s fragile power grid and mounting demand for energy from underserved households.
Rising Energy Prices Add to the Burden
As if the power strain wasn’t enough, Ethiopia is also considering raising electricity tariffs by up to 400% by 2028. For a country already grappling with inflation, energy inequality, and limited grid capacity, such a move could have devastating economic and social consequences.
Conclusion: A Digital Gamble with Real-World Costs
Ethiopia stands at a critical crossroads. While crypto mining may promise short-term economic gain, the long-term risks to national energy security, public welfare, and equitable development are becoming impossible to ignore. Unless decisive action is taken to balance innovation with infrastructure, the country could find itself in an energy emergency—powering machines while its people remain in the dark.
