Ethiopia’s highly contested and controversial Grand Ethiopian Renaissance Dam (GERD) was officially inaugurated on September 9, 2025, marking the completion of one of Africa’s most ambitious infrastructure projects. The event opened a new chapter in the decades-long tensions between Ethiopia and the downstream riparian states of Egypt and Sudan. Water scarcity in the Nile basin can be either physical, resulting from a lack of available water, or economic, arising from insufficient financial resources to utilize existing supplies. While Egypt and Sudan are physically water-scarce countries, facing declining per capita water availability, Ethiopia’s challenges are largely economic, having limited financial capacity to harness its water resources. This structural imbalance continues to fuel competition over the Blue Nile’s waters.
Ethiopia’s pursuit of energy security through the GERD is a legitimate national objective, yet the project risks exacerbating regional strains if downstream concerns remain unaddressed. Moreover, questions have emerged over whether the dam’s original development goals are being met, particularly as Addis Ababa explores alternative, profit-driven uses of GERD-generated power. Although the original objective of GERD was to generate surplus electricity for export to neighboring states as well as clean power for the people of Ethiopia, the country has instead experimented with other short-term ventures such as bitcoin mining—an unsustainable activity that consumes huge amounts of electricity as it requires powerful computers to run continuously. The operational usage of GERD risks undermining its original developmental rationale and raises critical questions about how to balance economic ambition and sustainable resource governance.
Regional Controversies
Ethiopia began construction of the GERD in 2011 without securing the consent of the downstream states of Egypt and Sudan, which were both in the midst of political turbulence: Egypt’s 2011 Arab Spring uprising had diverted Cairo’s attention from negotiations, and Sudan was caught up in the breakaway of South Sudan in the same year. In 2015, the three countries signed the Declaration of Principles (DOP), signaling a commitment to cooperation, yet a decade of negotiations has failed to produce an agreement on key technical issues—particularly the reservoir filling period, discharge rates, operation, and management. With the GERD completed, the focus now is to ensure that adequate discharge rates are maintained during dry seasons in order to protect downstream water security.
Ethiopia claimed the GERD as both a climate mitigation and an adaptation project designed to address the region’s environmental challenges. With a capacity of 5,150 megawatts and an estimated annual generation of 15,700 gigawatt hours, the dam is projected to reduce roughly 2 MtCO₂ of carbon dioxide, thereby contributing to greenhouse gas mitigation. At the same time, Ethiopian officials have argued that GERD serves as a form of climate adaptation by regulating water flows and by mitigating the severe floods that devastate Khartoum and other parts of Sudan every summer.
Downstream countries heavily criticized Ethiopia for initiating construction of the GERD before completing an Environmental and Social Impact Assessment (ESIA). Beginning an ESIA only after construction had started defeated its purpose of identifying and mitigating environmental and social risks during the design phase. This flawed sequencing was an indication of how Ethiopia sidelined environmental and social parameters throughout project construction.
In 2012, an International Panel of Experts (IoPE), composed of representatives from Egypt, Sudan, and Ethiopia as well as international specialists, was established to assess the dam’s potential impact on downstream countries. The panel’s work was prompted by the absence of a credible ESIA and by persistent complaints from Egypt and Sudan. The IoPE’s findings were critical: the study revealed, as Egypt wrote to the UN Security Council, that climate change impact had not been assessed at all.
Estimates indicate that Egypt could lose 3 billion cubic meters of Nile water annually.
Downstream countries, meanwhile, focused on the implications of GERD construction for water flow and performance of their own dams, such as the High Aswan Dam and Merowe, the outputs of which directly affect their national economies. Estimates indicate that Egypt could lose 3 billion cubic meters (BCM) of Nile water annually from 2055, about 5.4 percent of its current share of 55.5 BCM. By 2125, the loss could reach a total of 47.5 BCM, equivalent to some 85 percent of Egypt’s current Nile water. Such reductions would have far-reaching economic and ecological effects, potentially decreasing the Aswan Dam’s electricity generation by up to 36 percent and lowering the water level in Lake Nasser by an estimated 6.5 to 10.5 meters. The projected effects of the GERD on downstream countries are therefore severe.
Beyond its technical purpose, GERD has evolved into a powerful symbol of national pride— “hidase,” or “renaissance” in Amharic, embodying the Ethiopian government’s vision of self-reliance and state-led development. Financed primarily through domestic bonds and volunteer contributions, the project received no external funding. When asked about the prospect of joint management and operation with downstream countries, one Ethiopian survey respondent captured the general mood by saying, “That’s my dam, my money, it’s my investment and it’s our people’s dam and we are going to manage it.” Nationalism, not multilateralism, is shaping Ethiopia’s approach to the GERD and regional engagement.
Following the dam’s inauguration in September 2025, Egypt filed a complaint with the UN Security Council accusing Ethiopia of violating international law by launching and operating the dam without downstream consent, calling the move an “unlawful unilateral act.” Ethiopia countered that the project represents “equitable water use and a fair right to development.” Sudan, mired in war since 2023, has largely remained silent. Ethiopia’s decision to proceed amid Sudan’s instability mirrored the way it had capitalized on Egypt’s internal unrest to begin construction in 2011. The historic Egyptian-Sudanese alignment against Ethiopian actions may have been fractured by Sudan’s sidelining. As domestic instability and shifting geopolitical dynamics reshape the Blue Nile basin, the negotiations have been deadlocked since December 2023 due to ongoing disagreement over the dam’s operation and management.
In October 2025, Cairo claimed that Ethiopia had weaponized the dam by discharging water at rates that caused massive flooding in Egypt and Sudan. It alleged that Ethiopia had released 485 million cubic meters of water in a single day, and an additional million cubic meters two weeks later, before dropping to 380 million a few days after that. The estimates show a drop of nearly one meter in the water level, equivalent to about 2 billion cubic meters of stored water in just three weeks since GERD’s inauguration. The subsequent man-made flood placed lives and resources at risk in the downstream countries of Egypt and Sudan. Egypt further argued that this flood was caused by “the unregulated and chaotic nature of the dam’s management.” Ethiopia responded that Egypt was being “arrogant” and relying on “misinformation.” Their dispute goes back to one of the main issues of contention between Blue Nile countries over the GERD, namely who will manage and operate the dam. Egypt and Sudan are calling for joint management as a compromise, but Ethiopia steadfastly refuses.
The October 2025 floods affected the downstream countries extensively. As many as seven districts in Khartoum were inundated by water, including outlying villages and farmlands. Roseires, a dam in Sudan, could only retain part of the surge and was unable to deal with the increased floodwaters; it consequently had to keep its gates open for safety reasons. In Egypt, the High Aswan Dam was put on high alert, and residents of flood plains in several Nile Delta governorates received evacuation orders. These developments suggest that Ethiopia has been unsuccessful in using GERD to help protect against floods downstream, which was one of its original rationales for the dam. Tensions along the Blue Nile persist with little prospect of a breakthrough.
From Development to Bitcoin Mining
The GERD was conceived to electrify Ethiopia. However, in 2025, still only 44 percent of its population have access to electricity. This number falls short of the government’s target of providing electricity to 100 percent of the middle-income population in both rural and urban areas by 2025. GERD increased Ethiopia’s total generation capacity from 4,500 MW to 7,910 MW and now accounts for more than 50 percent of the country’s electricity generation capacity.
Electricity production began in 2022, before the dam’s completion, and by mid-2025 Ethiopia was exporting 200 MW to Kenya, 100 MW to Sudan, and 80 MW to Djibouti, as well as 100 MW to Tanzania through the East Africa Power Pool. However, inadequate connections, insufficient capacity, poor maintenance, and political instability in neighboring countries constrain power exports. Substantial investment in power infrastructure is needed before further transfers can proceed.
Ethiopia, along with several foreign companies, is using GERD-generated power to mine bitcoin.
Along with meeting domestic household needs or being exported to neighboring countries, Ethiopia began using energy generated from GERD to mine bitcoin, the best-known cryptocurrency. The mining process uses specialized computers that solve complex mathematical puzzles and are rewarded with newly created bitcoins, a digital currency that exists only online and can be exchanged directly without going through banks, payment processors, or government regulation. The value of bitcoin can fluctuate wildly, creating opportunities for immense profits as well as the risk of big losses. Ethiopia’s state-owned electricity utility company, along with a number of foreign companies including Chinese and at least one Emirati firm, are using GERD-generated power to mine bitcoin. Income from bitcoin miners now accounts for about 18 percent of Ethiopia’s revenue from electricity generation.
Bitcoin mining is extremely energy intensive. To mine one bitcoin in Ethiopia requires 6,400,000 kilowatt-hours (kWh) of energy, which is the equivalent of powering approximately 14,950 average Ethiopian households for an entire year, assuming an average electricity consumption of 93 kWh/person/yr. Because Ethiopia offers one of the lowest electricity rates globally (~3.2 cents/kWh), it has been especially attractive to Chinese companies looking to relocate operations after China banned bitcoin mining in May 2025. The cost to mine one bitcoin is $1,990 in Ethiopia, compared to just over $102,000 in the United States or $321,000 in Ireland. The environmental impact of bitcoin mining is also controversial. The scale of bitcoin mining requires cooling computers on a mass scale, a water-intensive process that in 2020-2021 consumed about 1.65 km³ of water globally—equivalent to 660,000 Olympic-sized swimming pools. Cooling systems can consume 10 to 15 percent of the electricity used in bitcoin mining, which represents a major operational challenge. Additionally, electronic waste (e-waste) from bitcoin mining is a growing environmental concern due to the short lifespan of mining hardware, which companies replace frequently to retain their competitive edge. These discarded machines contain toxic materials that can pollute soil and water if not properly disposed of. Most mining equipment is difficult to recycle, contributing to a mounting global e-waste problem.
Mining bitcoin in Ethiopia may be significantly cheaper than elsewhere, but it is inequitable to devote so much energy, water, and environmental degradation to bitcoin in a country where more than half the population does not have access to electricity—not to mention the impact on other countries downstream on the Nile.
Implications for Downstream Countries
Ethiopia’s decision to use at least some GERD-generated power for bitcoin mining instead of domestic electrification or regional energy exports has significant implications for Egypt and Sudan, intensifying concerns over water and energy justice in the Nile Basin. By pivoting toward monetizing energy generated by the GERD in the form of digital assets, Ethiopia is emphasizing its short-term economic interests over regional stability and inclusive development. In February 2024, Ethiopia decided against issuing new bitcoin mining licenses, due to the activity consuming as much as one third of Ethiopia’s total power output. But in 2024, Ethiopia received approximately $220 million from existing bitcoin mining concessions—only in August 2025 did it announce active bitcoin mining activities would be gradually phased out after the ban on new licenses. In the meantime, the state-owned utility provider, Ethiopia Electric Power, is devoting 50 percent of its revenues—including those obtained from selling power for bitcoin mining—to finance the new Koysha Hydropower Dam, which when completed will be the second largest in the country after GERD.
Egypt and Sudan rely heavily on predictable Nile flows for agriculture, drinking water, and hydropower but face heightened vulnerability as Ethiopia’s energy strategy becomes increasingly opaque and profit driven. Bitcoin mining is notoriously energy and water intensive, requiring massive cooling systems that consume substantial water resources, which are already scarce in downstream countries. Ethiopia’s unilateralism also threatens regional cooperation. Egypt’s recent complaint to the UN Security Council and accusations of weaponized water discharges illustrate the growing diplomatic rift. If it is not transparently governed and regionally coordinated, Ethiopia’s evolving energy strategy could destabilize the already fragile Nile Basin and deepen mistrust between riparian states.
Egypt’s potential response should be to rebuild regional alliances, particularly with Sudan, to present a unified front in negotiations. Historically aligned with Egypt on Nile water issues, Sudan could reassert its position if and when it regains stability, potentially joining Egypt in diplomatic efforts or regional coalitions to demand greater transparency and cooperative management of GERD, which has been a major request in the negotiations by downstream countries from the very beginning. For now, Sudan’s silence may reflect internal turmoil and strategic caution, but its long-term interests in water security and regional stability remain deeply affected by Ethiopia’s evolving energy strategy.
Conclusion
Ethiopia has used power from GERD to generate profits from cryptocurrency mining, despite its considerable downsides. Financial motivations here seem to outweigh environmental and social considerations. Regional tensions have escalated around the operation and management of GERD since its inauguration. The resulting floods in Egypt and Sudan have further exacerbated these tensions. For the sake of equity and regional stability, all riparian neighbors should be included in managing and operating the GERD project, fostering cooperative frameworks that balance national interests with shared sustainability and peace.
The views expressed in this publication are the author’s own and do not necessarily reflect the position of Arab Center Washington DC, its staff, or its Board of Directors.
Featured image credit: Wikimedia/PM of Ethiopia
