South Africa's state-owned power utility, Eskom, is courting cryptocurrency miners with a discounted tariff in an effort to offset losses in sales due to the country's high electricity prices. The utility has proposed a benchmark tariff of R1.20 per kilowatt-hour (kWh) for participating customers. This move is part of Eskom's plan to utilize excess electricity, with the power utility expecting to have surplus capacity as renewable energy projects come on stream.
Eskom's scenario planning shows that it will have five terawatt-hours (TWh) of surplus energy by 2028, enough to power about 450,000 average South African households for an entire year. The utility aims to sell this excess energy to cryptocurrency miners at a reduced price. According to the National Energy Regulator of South Africa (Nersa), cryptocurrency mining has evolved into an energy-intensive industrial activity that can both challenge and support electricity-system stability.
Nersa is considering Eskom's proposed tariff relief and has noted that two cryptocurrency companies have already shown interest in participating in the pilot launched by the power utility. The regulator says that the proposed tariff is intended to test whether a differentiated tariff structure can encourage consumption during periods of surplus electricity availability while discouraging consumption during periods of system constraint and peak demand.
The proposed pilot would apply for 24 months and would incorporate time-of-use pricing and location-based pricing signals. The applicable electricity price would be determined by the voltage category, transmission zone, and operating period. Eskom's application is informed by generation-production planning and National Transmission Company South Africa (NTCSA) system studies indicating periods of substantial surplus energy.
South Africa's electricity prices have surged more than 800% since 2007, putting significant pressure on households and industry. Industrial demand has plunged 22% in the past year due to high electricity costs, with smelters curtailing production. The sector paid a combined R115bn for electricity in the 2025/26 financial year, nearly R50bn more than they paid in the 2021 financial year.
To mitigate the impact of high electricity prices, Eskom has been entering into negotiated price agreements (NPAs) to provide relief to high-energy users. The utility has also been exploring ways to encourage consumption during periods of surplus electricity availability. Nersa has admitted that the NPAs have not been the economic panacea they were intended to be.
The cryptocurrency miners that have expressed interest in participating in Eskom's pilot have a combined initial demand of approximately 10MW and potential expansion of up to 500MW. These operations are characterized by flexible, containerized infrastructure and a willingness to locate near generation facilities. The applicants have also indicated potential ancillary community-development initiatives.
Key points
- Eskom offers cryptocurrency miners a discounted tariff of R1.20 per kWh to use excess electricity.
- The proposed pilot aims to encourage consumption during periods of surplus electricity availability while discouraging consumption during periods of system constraint and peak demand.
- Two cryptocurrency companies have expressed interest in participating in Eskom's pilot, with a combined initial demand of approximately 10MW and potential expansion of up to 500MW.
