‎Crypto Boom Makes For Power Burden In Ethiopia

Data centers set to consume 30 percent of grid electricity in 2025

The booming cryptocurrency mining and data center industry in Ethiopia is forecast to consume nearly a third of the country’s electricity supply in 2025, raising concerns about energy allocation in a country where half the population still lacks reliable access to power.

‎Electricity demand from crypto-related data centers will exceed eight terawatt hours (TWh) this year—equivalent to about 30 percent of total national demand, according to the newly released Ethiopian Energy Outlook 2025.

‎The report, prepared by the country’s state-owned utility firms and the Petroleum and Energy Authority, questions whether such usage is appropriate, given widespread reliance on diesel generators in agriculture and industry, and with persistent blackouts for millions of households.

‎”Since the demand and supply balance is tight, it remains an open question whether the power could be better used for export, general electrification or other productive uses, like pumping of water in the water and agriculture sector, where diesel generators are used to a wide extent,” it reads.

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‎While crypto operations are seen as a source of foreign exchange and digital infrastructure, their massive energy footprint has sparked debate over equity and efficiency.

Despite ambitious targets and large-scale infrastructure programs, progress in electrifying Ethiopia has been slower than expected.

An estimated 2.2 million households were connected to the grid in the five years leading up to 2024 under the second iteration of the National Electrification Program (NEP), but nearly 50 percent of the population still lacks access to reliable electricity, and only 22 percent has legal (metered) grid connections, according to the report.

‎It warns that the slow expansion of electricity access hinders economic development and reduces the potential benefits of other energy sector reforms.

‎”Addressing this issue requires increased infrastructure investment and innovative solutions to extend energy access to underserved areas. The respective tariff and exchange rate reforms are expected to alleviate the lack of materials for electrification, one of the main barriers to its progress,” it reads.

While the current distribution grid covers only 25 percent of Ethiopia’s land area, 68 percent of the population resides less than five kilometers from the grid.

“This highlights the potential to triple the number of household connections within the footprint of the existing grid. Implementing cost-reflective tariffs will provide EEU with resources for new connections, making widespread electrification more feasible,” reads the outlook.

‎It stressed that relatively expensive mini grids are expected to play a major role in the updated electrification plan.

‎Still, given the tight balance between electricity supply and demand, it remains an open question whether the power could be better used for general electrification or productive sectors.

‎Addis Ababa enjoys an electrification rate of nearly 93 percent, while regions such as Afar and Somali remain below 12 percent, reveals the outlook.

The report also reveals intentions to increase electricity tariffs by up to 400 percent by 2028 under a new cost-reflective pricing regime under NEP 3.0 (National Electrification Program).

‎The sectoral institutions who authored the report noted the new plan is crucial to revising targets, setting more realistic goals, and incorporating new technologies and funding mechanisms to accelerate progress.

‎Analysts expect the hike to diminish the appeal of crypto mining, which currently benefits from below-market power rates and tax regulation.

‎”Rising tariffs are likely to reduce the incentive to invest in crypto mining in Ethiopia,” the report notes.

‎The industry’s expansion coincides with daily power cuts that affect businesses and hospitals alike, averaging 39 interruptions per month with an overall duration of 21 hours or three percent for large users.

‎While crypto mining offers foreign direct investment opportunities and taps into Ethiopia’s 98 percent renewable energy mix, critics argue that its expansion during a national electrification crisis could jeopardize broader development goals. As the Outlook notes, 15 million households still await their first grid connection.

‎The country’s embrace of Bitcoin mining marks a dramatic shift from its 2022 position, when the National Bank of Ethiopia (NBE) banned cryptocurrency trading. By 2023, the government began quietly registering mining firms through its cyber security agency INSA, signaling a calculated pivot toward monetizing digital infrastructure.

‎Yet this policy shift now collides with fundamental questions of energy justice. In a country where clinics operate without reliable electricity and farmers depend on diesel pumps for irrigation, allocating scarce power to energy-intensive mining operations may deepen social and regional inequalities, critics worry.

‎The report concludes with calls for a reassessment of energy allocation, urging policymakers to consider trade-offs between digital infrastructure growth and essential services.