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In Ethiopia, bitcoin miners ran into an unexpected obstacle - not the price of the coin, equipment or regulations, but the lack of water for hydroelectric power plants. The state-owned Ethiopian Electric Power (EEP) has cut the supply of energy to mining companies by 75%. In fact, they get only 23% of what is stipulated in the contracts. The remaining resources are allocated to residential buildings and factories.

The head of EEP, Ashebir Balcha, explained that the reduction was carried out stepwise: first to 75% of the contract volume, then to 50% and finally to 23%. All because of the drought and the severe drop in water levels in reservoirs. The culprit is called El Nino — when the water in the equatorial Pacific Ocean heats up, the weather changes around the world, which has led to a shortage of hydropower.

It's important to remember that half of Ethiopia's population lives without electricity. Therefore, with limited resources, EEP prioritizes household and industrial needs, while miners remain in last place. They promise to review the situation in October, but if water does not arrive and domestic consumption increases, supplies may be cut even more. Restrictions on energy exports to neighboring countries are also possible.

Previously, miners were key consumers in the country: cheap hydropower made Ethiopia attractive. According to Bloomberg, over the past fiscal year, they burned almost a third of all generation and brought 35% of revenue to EEP. Capacity growth was supported by the GERD dam, which strengthened the country's position on the world stage.

An example is Phoenix Group from the ADX exchange: in April last year, it increased its capacity in Ethiopia to 132 MW, opening a 52 MW farm. By January, the country was yielding about 2.6% of the global bitcoin hashrate (approximately 27.5 Eh/s). This does not make it the center of the industry, but it is noticeable.

The main question is what's next. The global hashrate is unlikely to collapse because of one country, but the situation serves as a warning: mining depends not only on the price of bitcoin and iron, but also on water, climate, and energy solutions. El Nino doesn't look at contracts. If the drought drags on, miners will have to wait, move, or negotiate anew. Ethiopia is still attractive because of cheap energy, but this attractiveness no longer guarantees stability.