What happens when a rural African community generates more electricity than it can use? Is Bitcoin mining the key to transforming excess hydropower into a catalyst for local economic growth?
Zengamina’s Revival Through Innovation
In the remote Ikelenge district of northwestern Zambia, a small hydroelectric plant is generating more electricity than the surrounding villages can utilize.
Established in the early 2010s with $3 million in charitable funding, the 1-megawatt Zengamina facility was designed to power a rural hospital, electrify homes and schools, and bolster local development initiatives.
Yet, for years, much of this electricity went untapped. With a population of approximately 15,000 and limited commercial or industrial activity, the community lacked the infrastructure to utilize the surplus energy.
This resulted in more than half of the plant’s output being routinely wasted, redirected back into the river.
By 2022, the project encountered significant challenges. Planned expansions were halted, income had fallen below break-even, and the vision for broader energy access was diminishing. Then, an innovative partner emerged with a unique solution.
A startup introduced a mobile Bitcoin (BTC) mining unit to the Zengamina site, comprising a shipping container fitted with 120 ASIC mining machines.
This setup, connected directly to the local mini-grid, operates continuously, converting unused electricity into a steady stream of Bitcoin.
Each mining machine generates approximately $5 per day at current market rates, though earnings vary with Bitcoin prices and mining difficulty. A portion of this revenue is shared with the hydro plant, now contributing nearly a third of Zengamina’s total income.
This financial uplift has led to practical improvements. Electricity tariffs have decreased, additional households have been connected, and the plant is now functioning closer to its full capacity—enhancing service to the community.
However, the larger question looms: is this a unique success, or could this model create a scalable solution for rural electrification in areas lacking traditional economic incentives? Let’s explore further.
Innovative Solutions for Energy Challenges
Zengamina is not an outlier. Across sub-Saharan Africa, many small-scale energy projects face a common issue: abundant power, but insufficient demand to utilize it.
Mini-grids, often established through donor funding or development grants, frequently operate below capacity—not due to a lack of electricity generation, but because there’s no industrial infrastructure to support it.
Data indicates that over 65% of these systems remain commercially unviable, relying on subsidies, carbon credits, or philanthropic investment.
Seeking to reform this model, a new company has installed mobile Bitcoin mining units at several hydro sites in Kenya, Malawi, and Zambia—selected specifically for their capacity to generate clean energy in low-demand areas.
The Bitcoin mining rigs act as financial stabilizers: they operate around the clock, converting otherwise wasted energy into immediate revenue.
At Zengamina, these changes have been swift. With a reliable energy buyer in place, the plant has broadened its service coverage, lowered tariffs, and expanded services to new areas of the community.
Small businesses—including barbershops, kiosks, and internet cafés—are able to extend their hours. Internet connectivity has seen noticeable improvements. Access to electricity has transitioned from being merely symbolic to genuinely functional.
Importantly, this partnership was not intended to be permanent. The mining operation is viewed as a transitional phase. As local energy demand increases, its presence will decrease. Zengamina anticipates connecting to Zambia’s national grid within the coming year, enabling better pricing through utility collaborations. When this occurs, the mining rig will be withdrawn, and the company will redirect its operations elsewhere.
Navigating Energy Economics
The company is also seeking funding to develop its own small-scale hydroelectric projects, focusing on run-of-river systems that do not require dams and can function in remote, off-grid settings.
The strategy is to incorporate Bitcoin mining from the start—using it as an initial revenue source while local energy needs gradually develop.
A co-founder describes this initiative as a “consumer-driven, adaptive energy model,” aiming to start with mining while transitioning toward sustained community electrification.
Evidence suggests that this model has potential for scalability. It is estimated that Africa possesses over 300 gigawatts of untapped hydropower potential, primarily in regions with limited industrial operations—areas often overlooked by traditional energy investors.
In these contexts, Bitcoin miners could function as early purchasers of energy, allowing power infrastructure to be monetized before broader economic demand manifests.
Nonetheless, this concept is not without its critics. Some policymakers worry that mining operations could ultimately compete with local energy users for electricity, particularly if Bitcoin prices rise and miners aggressively seek low-cost power.
These concerns are not unfounded. In 2021, Kazakhstan experienced notable disruptions after an influx of miners followed China’s cryptocurrency ban, leading to increased national electricity consumption and subsequent blackouts.
Similarly, parts of the United States have faced challenges; in states like New York and Texas, regulators have sought to limit large-scale mining during peak demand periods.
Even smaller facilities have been affected. In early 2024, a gas-powered mining operation was temporarily shut down during extreme cold to prioritize residential heating needs, prompting regulators to draft guidelines for energy usage during shortages.
However, the company asserts that its approach mitigates these risks. Its operations are off-grid, utilizing renewable energy sources and directly engaging with local communities.
It emphasizes that residential and commercial users hold priority, and operations will scale back as local demands rise.
Some experts point out that market dynamics can change rapidly. If Bitcoin prices surge dramatically, the attraction of mining might lead even off-grid operators to prioritize crypto-related revenue over community needs.
Without clear regulations or transparent power usage agreements, the very approach that initially supports rural development could become a source of contention.
Assessing the Model’s Scalability
Success at Zengamina is attracting wider interest. As global scrutiny regarding Bitcoin’s energy consumption increases, more off-grid energy projects are considering integrating mining to stabilize finances, particularly in areas where electricity production is abundant yet underutilized.
Off-grid mining, once deemed niche, is now gaining momentum for its environmental benefits and practical advantages: it allows miners to bypass regulatory hurdles, mitigate peak-hour costs, and reduce liability related to public electricity infrastructures.
Real-world applications are emerging across various regions. For instance, in the Democratic Republic of Congo, a Bitcoin mining project powered by Virunga National Park’s hydro plant is supporting conservation initiatives. In Ethiopia, energy sales from a major dam have been authorized for industrial mining firms, thus leveraging excess capacity for fiscal management.
Similar agreements are being developed in Paraguay and Suriname, where hydroelectric generation consistently exceeds domestic consumption.
In these scenarios, the incentive structures are favorable. Energy developers receive immediate, steady revenue, while miners gain access to dependable, cost-effective power, often without needing subsidies or extensive transmission networks.
However, these outcomes depend heavily on well-defined contractual arrangements—Ensuring community access is prioritized, revenue-sharing is clear, and provisions exist for phasing out mining operations when alternative energy uses arise.
The approach aims to transition away from mining as local energy needs mature, emphasizing Bitcoin mining as a temporary financial mechanism that monetizes surplus power.
Now, with Bitcoin approaching $88,000 and mining profitability tightening worldwide, more companies are exploring remote locations offering low-cost, regulation-friendly energy sources. In areas with surplus capacity but limited investment, this model could expand sustainably if given the operational flexibility to do so.
