Ethiopias Energy Sector Faces Major Tariff Reforms Amidst Explosive Demand from Cryptocurrency Miners

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

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

The report’s authors believe that the rise in tariffs is likely to diminish incentives for investing in mining within the country. The new demand adds further strain to an energy system that is already facing significant challenges.

Around 25% of the country’s generating capacity is idle due to a lack of imported spare parts for repairs. Major industrial consumers, on average, experience 39 power outages per month, totaling 21 hours.

It is important to note that all electricity in Ethiopia’s national grid is generated 100% from renewable sources, primarily through hydroelectric power plants. A key facility in this regard is the Grand Ethiopian Renaissance Dam (GERD).

Progress in electrifying the population remains slow, with only 22% of households having legal access to the grid. Simultaneously, the government is promoting the transition to electric vehicles, which are expected to comprise 28% of the national vehicle fleet by 2030.

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

Africa is becoming a hub for outsourcing business processes due to low labor costs, a young English-speaking workforce, and governmental support. The sector in the country is projected to grow by 14% annually, nearly double the global rate.

Furthermore, The Africa Report reported in December 2024 that Bitcoin miners account for nearly one-fifth of all electricity sales revenue in Ethiopia.