Bitcoin Devours Electricity Meant for the World's Poor

A new and alarming trend is emerging in the global energy landscape. For decades, developing nations have relied on hydroelectric dam projects as a cornerstone of their economic development. Today, this strategy is being undermined by fierce competition from the cryptocurrency mining sector, which consumes massive amounts of electricity and threatens to derail the hopes of lifting millions out of poverty.

A Race for Cheap Electricity: Mining vs. Development

Cheap hydropower has long been a key to development plans in emerging economies. Since the 1950s, leaders in countries like Egypt and Ghana saw dams as the key to national sovereignty and economic growth. Today, this dream is being challenged by data centers for crypto mining and AI model training, which are competing with the poor for the same resource.

• The Poor: Need electricity for lighting their homes, powering essential appliances, and running nascent industries that create jobs.

• Crypto Miners: Consume vast quantities of electricity to solve complex mathematical puzzles for digital rewards. The energy consumption of Bitcoin's blockchain alone now rivals that of an entire country like Australia.

Real-World Examples: How Mining Consumes Development Dreams

The stories of several developing countries illustrate how energy projects are being diverted from development to serve the crypto sector:

• Ethiopia: Following the completion of the Grand Ethiopian Renaissance Dam, which promised to transform the nation, crypto miners are now consuming around 30% of the electricity, even though four out of five households remain without legal grid access.

• Bhutan: In this Himalayan kingdom that relies almost entirely on hydropower, a company called Bitdeer Technologies is set to launch two data centers that could consume a quarter of the country's electricity. This power could have served thousands of rural families who still depend on wood for cooking and heating, leading to high rates of lung diseases.

• Laos: Despite being known as the "battery of Southeast Asia," the country experienced power outages last year due to mining, which consumes more electricity than all its households combined.

• Georgia and Paraguay: These nations have faced potential blackouts due to the growing demand from crypto miners, prompting warnings of a national grid collapse.

The Allure of Immediate Revenue and Future Risks

The promise of immediate revenue from crypto mining centers is tempting for developing countries' governments, who see it as a quick solution to fund development projects. However, this model carries significant risks. It could lead to an addiction to fast returns, a disregard for the population's basic needs, and an unjust distribution of wealth—mirroring the fate of oil-rich nations whose people remained mired in development poverty.

This situation calls for multilateral development banks, which are major funders of hydropower projects, to reconsider their strategies. They must ensure that the electricity generated by these projects is allocated for sustainable and equitable development, rather than being wasted on digital speculation that benefits a global elite at the expense of the majority.