Power Co. Unleashes Tariff Shock Rattling Crypto Mining Industry

Nov 2 , 2025. By SURAFEL MULUGETA ( FORTUNE STAFF WRITER )

The Ethiopian Electric Power (EEP) is set to overhaul its electricity pricing policy for data and crypto mining companies, a move scheduled for December 1, 2025. The new rules introduce a three-tiered time-of-use system, replacing the existing flat-rate structure that attracted global data mining giants to the country.

The burgeoning data mining industry is struggling with mounting concerns following the Ethiopian Electric Power's (EEP) unveiling of a comprehensive overhaul to its electricity tariff rate.

The new pricing policy, set to take effect on December 1, 2025, specifically targets the growing cohort of crypto and data mining operations. This industry has attracted global attention due to low power costs. According to EEP senior executives, the revised tariff structure is designed to reflect the increasing costs of energy generation and transmission, and to align electricity prices with a national cost recovery plan.

The state utility insisted that the decision to revise tariffs is part of a wider effort to ensure the financial stability of the power sector, particularly as industrial energy demand accelerates.

“This is a crucial step to maintain a reliable, secure, and sustainable electricity supply for all major consumers,” EEP wrote in a letter to data mining companies on October 27, 2025.

A new Time-of-Use (TOU) system will replace the long-standing flat-rate approach. Companies will pay varying rates depending on when they consume electricity. The day is divided into three periods. Peak hours, between 6:00pm and 10:00pm, will command the highest rates. Shoulder hours, from 5:00am to 9:00am, will be priced moderately. Off-peak hours, from 09:00am to 6:00pm, and again from 11:00pm to 5:00am will offer the lowest tariffs.

During the first phase, which runs from December 1, 2025, to July 7, 2026, the average base rate will be 0.04 dollars a kilowatt-hour, with US six cents charged during peak periods, 4.5 cents during shoulder hours, and 3.5 cents overnight. The following period, between July 8, 2026, and July 7, 2027, will see the average rate rise to five cents, with 6.3 cents charged during peak hours, 5.55 cents during shoulder windows, and 4.65 cents during off-peak hours. The third phase, from July 8, 2027, to July 2028, raises the average tariff to 6.5 cents, peaking at 7.2 cents during the busiest hours, 6.45 cents during shoulder periods, and 6.35 cents overnight.

According to EEP, these tariffs already include a 15pc VAT and a 0.5pc regulatory fee, with the possibility of further taxes should government policy dictate.

Another notable change is the introduction of an Availability-Based Tariff (ABT) system, designed to adjust rates based on the actual power supplied. In periods of hydrological shortage or other supply constraints, data centres will pay discounted rates, proportionate to the reduction in electricity received. If supply drops to 60pc to 69pc of expected levels, customers in the base four-cent category will pay 3.24 cents a kilowatt-hour, while those in the five-cent category will pay 4.125 cents.

Similar proportional adjustments are built into all tariff tiers, a move EEP says will encourage more efficient energy consumption and billing transparency.

However, data mining operators argue that the abrupt timing and steep trajectory of the price hikes have left them reeling. For many data mining companies, especially those operating in the cryptocurrency industry, the new policy has triggered alarm and uncertainty. According to those active in the industry, the complex tariff structure and a series of sharp increases over the next three years could undermine the country’s cost advantage and prompt some operators to look elsewhere.

According to a senior employee at a local data mining firm, speaking on condition of anonymity because industry players plan to negotiate for a lower tariff, the changes threaten to upend Ethiopia’s status as a competitive hub for cryptocurrency mining.

“What attracted global mining companies here was the relatively low power tariff,” he told Fortune. “We already face infrastructure and bureaucratic challenges. Increasing electricity costs by this much will make investors reconsider and look for cheaper alternatives elsewhere.”

Under the prevailing tariff, companies pay a flat rate of about 3.14 US cents a kilowatt-hour.

“To minimise costs, operators might be forced to shut down some machines during peak hours, which directly harms production and profit,” he said.

Kal Kassa, a prominent advocate for the data mining industry, echoed these sentiments. He called the adjustment a major financial hit for operators, estimating that the new tariff structure will push annual electricity costs up by roughly 25pc to 30pc, a far cry from what most companies expected when they signed power purchase agreements.

Mining one Bitcoin in Ethiopia costs more than 50,000 dollars, considering power, hardware, and labour. There are around 25 licensed data mining firms operating in Ethiopia, most employing between 50 and 100 people and contracting out additional work.

“When the power purchase agreements were first signed, they're told there would be no tariff increase for five years,” Kal said. “The agreements included a clause allowing changes for financial reasons, but this jump is far beyond reasonable expectations.”

According to Kal, the adjustment kicks off with a 32pc increase on December 1, 2025, followed by further hikes of more than 20pc in July 2026 and 2027.

“Before this policy, data mining sectors paid about 3.2 cents a kilowatt-hour, or 3.6 cents after tax,” he said. “By the third year, it will be more than six cents, almost double.”

Kal warned that such a rapid escalation could force companies to shift operations to other African markets offering more stable pricing.

“If they shut down, revenue disappears overnight,” he told Fortune. “We want Ethiopia to remain Africa’s number one data mining hub,” Kal said. “But unless policy and tariff rates are stable, it will be difficult for investors to stay.”

Mining operations now consume roughly a third of the national power output, according to the Ethiopian Energy Outlook 2025. The EEP utility earned 338 million dollars from electricity exports last year, including 55 million dollars from Bitcoin mining over 10 months in 2024, a figure that surged to 220 million dollars in 2025 as activity expanded.

The authorities have adopted a cautious position toward crypto mining, suspending new licenses as of March 2025 and blocking imports of transformers and mining hardware by the end of the year. Companies in the industry operate multiple transformers and thousands of mining machines, pouring millions of dollars into infrastructure.

Senior executives of EEP, however, argue that the new tariff regime was not imposed without consultation.

According to Andualem Siae, deputy CEO of EEP’s transmission business unit, the decision followed a meeting with representatives from the data mining industry, and the utility remains open to further dialogue with investors.

Biniam Tufa, general manager of JASBEL Energy Limited and an engineer by training, offered another perspective on the change. According to him, the TOU system encourages operators to use more power during off-peak hours, helping to reduce pressure on the national electric grid when demand is high.

“This sector is relatively small in number but has a large impact on the grid," he told Fortune. "By introducing time-differentiated tariffs, operators are encouraged to shift their operations to off-peak hours. This allows other industries and companies to access more power during peak hours, which helps distribute electricity more fairly across all sectors.”

He sees the ABT system guaranteeing fairness by reducing charges when contracted power is not delivered, making the system more equitable for both suppliers and consumers.

“If a data mining company does not receive the electricity agreed upon in its contract with EEP, the tariff automatically decreases to reflect the reduced supply," he said. "This ensures that companies pay proportionally for the power they actually receive, maintaining equitable service and accountability.”

Biniam cautioned against further expansion of the sector for now. He fears that the industry consumes a large portion of the available electricity, and the current infrastructure cannot support many more companies without affecting other critical industries and households.

Ethiopia has quietly emerged as one of Africa’s unexpected crypto-mining frontiers, with nearly 20 more data-mining companies awaiting licenses, as a government freeze on new power allocations stalls expansion plans. Most operators are foreign, lured by the country’s low electricity tariffs and abundant hydropower, wind, geothermal and waste-to-energy plants, including the Grand Ethiopian Renaissance Dam (GERD), which generate 9,761Mw electric power.

The three biggest players, Phoenix Group of the UAE, West Data Group from Hong Kong, and China’s BIT Mining Limited, have invested heavily in mining infrastructure. Phoenix runs a 132Mw facility, West Data entered with a 250 million dollar deal in 2024, and BIT Mining operates 35Mw, with plans for 51Mw. Other Chinese-origin firms such as Canaan, Bitdeer, and BitFuFu have clustered around Addis Abeba’s transmission corridors. Officials estimate total foreign investment in the industry has surpassed half a billion dollars, with Phoenix, West Data, and BIT Mining representing the bulk of that capital.

Crypto mining now consumes a third of Ethiopia’s grid, officials have warned, prompting the government to halt the issuance of new licenses amid concerns over electricity supply for domestic industries and rural areas.

“The focus should be on maintaining the sector at its current scale, rather than promoting additional entrants that could increase total power consumption,” said Biniam. “Even with the new rates, power costs for data mining operations are still among the lowest in the world.”

However, Fre'adam M. Eshete, operations director at QRB Labs Data Centre and a pioneer in the domestic Bitcoin mining industry, warned that the new tariffs could damage the country’s nascent mining sector.

“Low power tariff rates were Ethiopia’s only real advantage,” Fre'adam told Fortune. “Everything else, like bureaucracy, logistics, and infrastructure, has always been difficult. Without low-cost power, the business case for mining in Ethiopia disappears.”

According to Fre'adam, electricity accounts for around 60pc of the total cost of Bitcoin mining. He argued that even a slight increase in power prices can destroy profitability. Despite some competitive advantages such as renewable hydropower, a young workforce, and favourable climate conditions, Fre'adam warned that higher power costs could offset all other gains.

“In countries like Norway or Canada, miners spend almost nothing on cooling because of the cold weather,” he said. “Here, even though we have cooler conditions than many parts of Africa, power cost still decides everything.”

Freadam warned that the new policy might force some mining companies to shut down or relocate.

“Losing these companies would hurt not only us but also the Ethiopian Electric Power,” he said. "This industry works with very thin profit margins. Even a few cents’ difference in electricity cost can decide whether a company stays or leaves. The new tariff might push Ethiopia out of the game.”

PUBLISHED ON Nov 02,2025 [ VOL 26 , NO 1331]