Ethiopia’s Digital Gamble: When Bitcoin Mines While Citizens Sit in Darkness
1
0
A nation trades its humanitarian soul for cryptocurrency’s fleeting promise
By Thomas Araya, Ethiopian Tribune columnist
In the dim glow of kerosene lamps that still illuminate over half of Ethiopia’s homes, a troubling paradox unfolds with the relentless logic of a Greek tragedy. Whilst 57 million of our citizens lack basic electricity, more than half the population of this ancient nation, foreign-owned warehouses filled with humming computer servers consume enough power to light 15,000 households, all in pursuit of digital coins that exist nowhere and everywhere at once. The servers run twenty-four hours daily, their cooling fans whirring in climate-controlled facilities that would be the envy of any hospital or school in the provinces, mining cryptocurrencies whose value fluctuates wildly on exchanges in London, New York, and Singapore, enriching foreign investors whilst Ethiopian families cook over wood fires and children strain their eyes reading by candlelight.
This is the new face of Ethiopian development, a stark choice between immediate dollar earnings and the long-deferred dreams of our people. It is a choice that speaks volumes about where we stand as a nation, and perhaps more disturbingly, about what we have become willing to sacrifice in our desperate pursuit of hard currency. The transformation has been swift and brutal, a reorientation of national priorities so complete that it has left even seasoned observers of Ethiopian politics struggling to comprehend its full implications. What we are witnessing is nothing less than the commodification of our national resources in service of the most ephemeral and volatile of global financial instruments, a gamble that would make even the most reckless speculator pause for thought.
The story begins with abandonment, as so many African development narratives do, though this time the abandonment came not from neglect but from a calculated withdrawal following documented failures of governance and transparency. Until recently, Ethiopia stood as a cornerstone of international development assistance, a favoured child of Western donor nations, receiving over two billion dollars annually from the United States alone. The relationship, however paternalistic and problematic in its assumptions, provided a financial bedrock for programmes addressing everything from HIV response to maternal health, from agricultural development to the support of over one million refugees who had fled conflicts in neighbouring Somalia, South Sudan, and Eritrea. Then came the Tigray conflict, that devastating two-year war whose full human cost may never be properly tallied, bringing with it documented cases of aid diversion, allegations of war crimes, and a breakdown in the delicate trust between the Ethiopian government and its international benefactors.
The suspension of humanitarian support in 2023, triggered by concrete evidence that food aid was being systematically diverted from its intended recipients, marked a profound rupture in Ethiopia’s post-imperial relationship with the West. The withdrawal was swift and devastating, executed with the kind of bureaucratic efficiency that characterises donor nations when they lose confidence in a recipient government’s commitment to transparency. Critical programmes addressing public health infrastructure, food security in drought-prone regions, and the massive logistical challenge of managing one of Africa’s largest refugee populations were suddenly left without funding, creating gaping holes in the social safety net that had, however imperfectly, kept millions from absolute destitution. Humanitarian organisations, many of which had operated in Ethiopia for decades, found themselves facing an immediate liquidity crisis, forced to shutter clinics, abandon feeding programmes, and lay off local staff who had devoted their professional lives to serving their communities.
Into this vacuum rushed a very different kind of foreign interest, one motivated not by humanitarian concern but by the irresistible mathematics of profit. Cryptocurrency mining operations, those peculiar children of twenty-first century financial innovation, found in Ethiopia’s crisis an unprecedented opportunity. The nation’s massive hydroelectric capacity, crowned by the controversial Grand Ethiopian Renaissance Dam that colossal project which has strained relations with downstream Egypt and Sudan whilst becoming a potent symbol of Ethiopian sovereignty and ambition offers these digital prospectors something rare and precious in an age of escalating energy costs. Electricity in Ethiopia is so remarkably cheap that mining a single Bitcoin costs approximately £1,570, compared to over £79,000 in Western nations where energy prices reflect true market costs and environmental externalities. The comparative advantage is so overwhelming that it has transformed Ethiopia into one of the world’s most attractive destinations for an industry that is, by its very nature, parasitic upon cheap energy and indifferent to the social consequences of its operations.
The government’s calculation is brutally simple, the kind of harsh arithmetic that characterises nations under severe fiscal strain. Crypto miners now account for an estimated eighteen per cent of Ethiopian Electric Power’s total revenue, translating into hundreds of millions in desperately needed foreign exchange. In an economy strangled by hard currency shortages, where essential imports from pharmaceuticals to industrial components remain tantalizingly out of reach due to the weakness of the birr and the scarcity of dollars, this influx of cryptocurrency-generated revenue appears as salvation itself. Ministers speak of it as a “strategic pivot,” a necessary adaptation to changed circumstances, a way of monetising the GERD’s surplus capacity whilst waiting for regional power export agreements that may never materialise given the geopolitical tensions surrounding the dam. The Ethiopian Electric Power utility has been effectively repurposed as a facilitator of this new financial strategy, its traditional mandate of providing universal electricity access subordinated to the imperative of generating hard currency through commercial contracts with foreign mining operations.
But salvation for whom, one must ask with increasing urgency as the social costs of this policy become impossible to ignore. Here lies the heart of Ethiopia’s development conundrum, a moral paradox so stark that it demands we interrogate our most fundamental assumptions about what development actually means. Whilst foreign investors enjoy subsidised, uninterrupted power under favourable commercial contracts negotiated in ministries in Addis Ababa, more than half our population remains without electricity, living in conditions that would have been familiar to their great-grandparents. The energy required to mine one Bitcoin, approximately 6.4 million kilowatt-hours, a figure so large it becomes almost abstract, could power 15,000 average Ethiopian homes for an entire year, providing light for studying, power for refrigerating medicines and food, energy for small enterprises that might employ dozens of workers. This is not merely an economic trade-off, the kind of difficult choice that governments must make in allocating scarce resources; it is a profound moral choice about who we are as a nation and what we value.
We have decided, whether through conscious policy or through the accumulated weight of expedient decisions made under duress, that generating cryptocurrency for global speculators takes precedence over lighting the homes of our own citizens, powering clinics in rural areas where women still die in childbirth at rates that would shock the developed world, or enabling children to study after sunset so they might have some hope of breaking the cycle of poverty that has gripped their families for generations. The defenders of this policy, and they are numerous and vocal in government circles and among the small class of Ethiopians who have benefited from the influx of cryptocurrency capital, point to immediate fiscal necessities. They are not wrong about our foreign exchange crisis, which is real and pressing and threatens to choke off what little economic growth we have managed despite multiple droughts, internal conflicts, and the lingering effects of the COVID-19 pandemic. Yet they fail to reckon with the long-term cost of this Faustian bargain, the way in which we are mortgaging our developmental future for short-term financial relief, building our economy on the most volatile foundation imaginable, the whims of global cryptocurrency markets where fortunes are made and lost in hours, where regulatory crackdowns in Beijing or Washington can wipe out billions in value overnight.
The macroeconomic volatility inherent in this dependency cannot be overstated. Bitcoin’s value is famously unpredictable, subject to wild swings driven by everything from tweets by eccentric billionaires to regulatory announcements by major economies to shifts in global risk appetite among institutional investors. This means the revenue stream that the Ethiopian government has come to depend upon is subject to extreme market fluctuations that are entirely beyond our control. A global downturn in cryptocurrency prices, and history suggests such downturns are inevitable and severe, could lead to a sudden and immediate contraction of this revenue, leaving Ethiopian Electric Power with stranded assets, infrastructure built specifically for mining operations that might simply pack up and move to the next cheap energy frontier, and the government without its planned hard currency influx. We have, in effect, substituted one form of external dependency for another, trading the paternalism and conditionality of Western aid for subordination to the volatile whims of global digital finance markets.
Whilst the energy paradox unfolds in the darkness of unelectrified villages across Oromia, Amhara, and the Southern Nations, another form of dispossession proceeds in broad daylight in the streets of Addis Ababa. The government’s vision of transforming our capital into a “global city,” a gleaming showcase that might attract the kind of tourism and investment that flows to Nairobi or Kigali, has triggered waves of forced evictions that bear an uncomfortable resemblance to the urban clearances that characterised European cities in earlier eras of capitalist development. Hundreds of families in districts like Addis Ketema and Kirkos, neighbourhoods that have housed working-class Ethiopians for generations, have been removed from their homes with little warning and compensation so inadequate it amounts to theft sanctioned by state power.
The Corridor Development Project and similar urban renewal schemes prioritise commercial development and infrastructure designed to attract high-end tourism and foreign capital, luxury hotels, shopping centres, wide boulevards suitable for motorcades, over the needs of existing residents. In practice, this means the systematic erasure of low-income communities, informal settlements that may lack official legal status but represent decades of social capital, mutual aid networks, and community building. These are neighbourhoods where everyone knows everyone, where childcare is shared, where the elderly are looked after by extended families, where small enterprises operate from front rooms and courtyards. The pattern of displacement is grimly consistent across multiple sites. State security forces arrive, often at dawn, demolitions proceed with mechanical efficiency, and families receive compensation far below market value, when they receive any compensation at all, which is by no means guaranteed despite official policies that purport to protect displaced persons.
Relocation to peripheral urban zones, often to high-rise housing blocks in developments with names that promise modernity and progress, severs these households from their livelihoods in the city centre, fractures social networks that took years to build, and imposes crippling financial burdens on families who suddenly find themselves responsible for mortgage payments or rent that consumes most of their income. Many of the displaced have been market traders, informal sector workers whose business depends on proximity to customers and suppliers in the dense commercial districts of central Addis Ababa. Moved to the periphery, they face impossible commuting costs or the loss of their customer base entirely. The government’s approach is non-participatory demolition, a policy implemented from above that treats citizens as obstacles to development rather than its intended beneficiaries, as impediments to progress rather than the very people in whose name progress is supposedly pursued.
Because land is state-owned in Ethiopia, a legacy of the Derg’s socialist policies that has persisted through subsequent regime changes, citizens are effectively tenants of the government, their security of tenure entirely dependent on the state’s goodwill and its current development priorities. This concentration of power enables evictions executed through centralised decision-making, often accompanied by explicit repression of any organised resistance. Dissent is framed as “anti-developmental” activity, even criminally unpatriotic, and spatial inequality becomes both the product and instrument of political control. The ruling Prosperity Party has found in urban renewal a useful tool for reshaping the capital’s social geography, moving potentially troublesome populations to the margins whilst creating new commercial zones that benefit party-connected developers and foreign investors.
The cryptocurrency industry’s environmental footprint extends well beyond the immediate question of energy consumption, imposing hidden costs that will burden future generations long after the current mining boom has moved elsewhere. The specialised hardware required for competitive mining Application-Specific Integrated Circuits, or ASICs, machines designed for no purpose other than solving the cryptographic puzzles that generate new coins has a brutally short competitive lifespan measured in months rather than years. Technological obsolescence, driven by the relentless escalation of mining difficulty and competition among miners globally, renders these machines worthless for their intended purpose with remarkable speed. Each wave of obsolescence generates mountains of toxic electronic waste laden with heavy metals like lead, cadmium, and mercury, along with flame retardants and other hazardous substances that require sophisticated recycling infrastructure to process safely.
Ethiopia possesses virtually no such infrastructure, no facilities equipped to safely dismantle ASIC miners and recover valuable materials whilst properly disposing of toxic components. These discarded machines, each containing a witch’s brew of environmental hazards, end up in unregulated landfills on the outskirts of cities, where informal recyclers, often children and the desperately poor, pick through them for anything of value, exposing themselves to toxins in the process and contaminating soil and groundwater that will affect communities for decades. We are, in effect, becoming a dumping ground for the developed world’s digital gold rush, inheriting environmental liabilities that will persist long after the miners have moved on to cheaper pastures in Kazakhstan or Paraguay or wherever the next energy arbitrage opportunity presents itself. The lifecycle of a mining operation in Ethiopia increasingly resembles extractive industries of an earlier era arrive, exploit the resource advantage, leave behind environmental devastation and stranded communities.
The convergence of aid retreat and cryptocurrency influx has created a visibly bifurcated nation, a country divided against itself in ways that threaten the social cohesion necessary for long-term stability and genuine development. On one side of this divide stand the winners in this new dispensation: foreign-owned mining facilities with guaranteed power and favourable tax treatment, international investors extracting value that flows out of the country as quickly as it flows in, urban renewal projects catering to global capital and the thin layer of Ethiopian elites connected to government and party structures, and the government itself with its hard currency revenues that allow ministers to import luxury vehicles and maintain foreign exchange reserves. On the other side stand the vast majority of Ethiopians: millions without electricity continuing to cook over wood fires and paraffin stoves, displaced urban poor pushed to the margins of cities where they once had homes and livelihoods, rural communities watching transmission lines carry power past their villages to mining facilities, and the erosion of the humanitarian infrastructure that once provided a safety net, however threadbare, for the most vulnerable.
This is not development in any meaningful sense of that much-abused term; it is extraction with a modern face, exploitation dressed in the language of foreign direct investment and economic modernisation. We have substituted one form of external dependency, traditional aid with its conditionalities and paternalism, for another form of dependency on volatile global finance capital that cares nothing for Ethiopian welfare and will depart the moment more profitable opportunities emerge elsewhere. The crucial difference, and it is a difference that should give us pause, is that aid, however imperfect and problematic in its assumptions and implementation, at least nominally aimed at improving human welfare, at building capacity, at leaving behind infrastructure and trained personnel. Cryptocurrency mining aims only at profit, extracting value whilst contributing nothing to the country’s long-term development beyond tax revenues that pale in comparison to the opportunity cost of the energy consumed.
Ethiopia stands at a crossroads, though the metaphor perhaps understates the urgency and gravity of our situation. We can continue down this path, prioritising short-term hard currency earnings whilst our citizens remain in darkness and our cities hollow out from below, betting everything on the continued appetite of global speculators for digital assets whose fundamental value remains a matter of fierce debate even among economists and financial experts. Or we can demand a fundamentally different approach to development, one that places human welfare and long-term sustainability at its centre rather than treating them as externalities to be managed or ignored. This alternative path, and it must be said that the political will to pursue it appears entirely absent from current government thinking, requires concrete policy changes that would reorient our development priorities.
We must implement tiered energy tariffs that end subsidised power for foreign miners whilst prioritising domestic electrification, making it financially attractive for Ethiopian Electric Power to serve Ethiopian citizens rather than foreign corporations. We need mandatory environmental surcharges, substantial fees levied on mining operations to fund grid expansion into unserved areas and to establish proper e-waste management infrastructure that can handle the toxic legacy these operations will leave behind. Mining companies should be legally required to invest a significant percentage of their profits, ten per cent would not be unreasonable given the windfall they enjoy from our subsidised electricity, into local communities, particularly in off-grid solar installation projects that could provide immediate benefits to rural households currently beyond the reach of the national grid.
Most critically, we must halt forced evictions immediately and establish a transparent, rights-based resettlement system that treats displaced citizens as stakeholders with legitimate claims rather than as obstacles to be cleared away. Land tenure reform must recognise that decades of community building, of building homes and raising families and creating livelihoods, create legitimate claims that cannot simply be erased by bureaucratic fiat or justified by appeals to the greater good of national development. The international community bears responsibility as well for the current situation, having created the conditions through aid withdrawal that made the cryptocurrency bargain appear necessary to a government desperate for foreign exchange. Re-engagement with Ethiopia should be conditional on verifiable progress in transparency, with robust anti-corruption measures and demonstrable improvement in human rights protections, particularly regarding urban resettlement. Technical assistance should help us develop the regulatory capacity to manage cryptocurrency investments sustainably rather than allowing them to run roughshod over our development priorities, transferring expertise in e-waste management, grid planning, and energy policy that could help us extract genuine benefit from foreign investment rather than simply being exploited by it.
Ethiopia’s economic pivot will ultimately be measured not in the volume of Bitcoin mined, not in the millions of dollars flowing through Ethiopian Electric Power’s accounts, but in the number of Ethiopian homes finally connected to the national grid, in the security and dignity afforded to our urban poor, in whether a child in a village in Tigray or the Somali Region can study by electric light rather than by the light of a kerosene lamp that damages her eyes and lungs. Success is not counted in hard currency revenues that flow through our economy without touching the lives of ordinary citizens, enriching a small elite whilst leaving the vast majority in the same poverty that has characterised their existence for generations. We face a fundamental question about the kind of nation we wish to become, a question that goes to the heart of what it means to be Ethiopian in the twenty-first century. Will we be a country that powers the speculative investments of global capital whilst our own people sit in darkness, that clears away the homes of the poor to make way for shopping centres and luxury hotels that most Ethiopians could never afford to enter? Or will we insist that development means something more than GDP figures and foreign exchange reserves, that it must include equity, dignity, and the basic conviction that national resources exist first and foremost to serve national citizens rather than foreign investors?
The Grand Ethiopian Renaissance Dam, that monumental symbol of Ethiopian ambition and sovereignty, was built with the promise of illuminating our future, of providing the energy foundation for industrialisation and prosperity. Instead, we risk using it to mine digital gold for foreigners whilst our children still study by lamplight, whilst women give birth in clinics without reliable electricity, whilst small enterprises that might employ dozens cannot operate because they lack power. This is not the future we were promised when the GERD was conceived, and it is most certainly not the future we deserve. The choice remains ours, but only if we find the courage to reclaim development from the forces that would reduce it to a transaction, and reimagine it as what it should always have been: the patient, difficult work of building a nation where prosperity is shared rather than extracted, where progress lifts all boats rather than just those already floating in digital seas. The cost of hard currency, as we are discovering to our sorrow, can be measured in darkened homes, displaced families, and deferred dreams. Whether we are willing to continue paying that cost is the question that will define Ethiopia’s trajectory for decades to come.
