Eskom leans on Bitcoin mining for revenue

From the newsletter

South Africa's power utility Eskom plans to serve the growing power demand from data centres, crypto miners and artificial intelligence outfits in future. This strategic shift comes as private power generation is eroding its traditional market share, leading to a projected 5% annual decline in demand and the shift to targeting new sectors to diversify its revenue streams.

• Bitcoin mining is growing rapidly in Africa, with the continent’s crypto transaction volume expected to exceed $2.9 billion in 2025. South Africa is in the lead with trading volumes rising 40% year-on-year.

• Beyond South Africa, Ethiopia's cheap power is also attracting Chinese crypto miners, with over 30 firms on the ground. Kenya, Nigeria and Angola are emerging crypto hubs.

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• Eskom's colossal $22 billion debt has created immense financial strain, costing billions in servicing fees. Furthermore, Independent Power Producers have eroded Eskom's market share and created additional payment obligations. This situation is compelling the company to seek new high-demand customers to offset the shrinking traditional market for its baseload power. (Pictured is Eskom CEO Dan Marokane).

• At the same time, foreign firms are flocking to Africa for Bitcoin mining, drawn by cheap power. Ethiopia, for example, hosts Chinese miners like BitFuFu and BIT Mining, generating over $55 million for Ethiopian Electric Power in the past 10 months. This foreign currency revenue is highly attractive for the cash-strained Eskom, helping service foreign debt and stabilise finances.

• South Africa's crypto market is growing, but large-scale Bitcoin mining faces hurdles. Persistent load-shedding and unreliable power supply are major deterrents, making it hard to scale up operations. High backup power costs and evolving regulations further complicate the landscape, making consistent operations challenging.

• In the long run, AI and data centres offer significant growth potential for Eskom. The African data centre market is projected to reach over $5 billion by 2028, with South Africa as a key hub. These operations provide stable, 24/7 demand, offering predictable revenue for the company's baseload capacity and fostering economic development in the digital sector.

• Beyond operational hurdles, Eskom faces a considerable public perception challenge. Prioritising energy-intensive ventures for foreign currency revenue, especially while South Africans continue to experience power shortages, risks severe public backlash. Transparent communication and tangible commitments to ensuring the domestic power supply will be essential to mitigate public anger.

• Furthermore, the utility must navigate complex tariff structures. While these high-demand industries can afford premium rates, negotiating profitable yet equitable tariffs without unduly burdening other consumers will be a delicate balancing act with the National Energy Regulator of South Africa (Nersa).

• Overall, Eskom's strategy is a necessary evolution to meet the growing digital sector power demand. This could create anchor loads for new renewable energy projects, accelerating green energy investment. However, it must demonstrate a clear roadmap for decarbonising power to these new clients, ensuring this pivot aligns with South Africa's broader climate goals.

Our take

• To succeed, Eskom must prioritise grid stability and partner with renewable energy providers to reduce costs and carbon emissions, emulating successful African models like Ethiopia.

• Clear regulatory frameworks and community benefit programs are essential to ensure that digital energy users contribute to South Africa’s economic and energy transition goals without undermining grid reliability or affordability.

• Finally, Eskom’s long-term viability depends on accelerating debt restructuring, improving operational efficiency, and balancing revenue diversification with its social mandate to provide affordable, reliable power.