Eskom courts cryptocurrency miners with tariff discount

With South Africa’s sky-high electricity prices having decimated industrial demand, Eskom has turned to cryptocurrency miners to offset losses in sales — offering them tariff relief as it moves to implement its pilot to provide electricity to the sector.

Eskom’s plan is to let cryptocurrency miners and other flexible-load customers use the country’s excess electricity, with the power utility — which still supplies 80% of South Africa’s energy — proposing a benchmark tariff of R1.20 per kilowatt-hour (kWh) for participating customers.

Eskom expects 2028 to be a watershed year for its operations and anticipates sitting on excessive extra capacity as renewable energy projects come on stream — surplus capacity it is looking to sell to cryptocurrency miners at a reduced price.

The utility’s scenario planning shows it will be saddled with five terawatt-hours (TWh) of surplus energy, which is enough to power about 450,000 average South African households for an entire year.

In a public document, the National Energy Regulator of South Africa (Nersa) says that while cryptocurrency mining has evolved into an energy-intensive industrial activity that can both challenge and support electricity-system stability, it may, if unmanaged, place additional pressure on system capacity, increase emissions and create pricing distortions.

Nersa, which is mulling the tariff relief proposed by Eskom, says two cryptocurrency companies have already shown an interest in participating in the pilot launched by the power utility.

“Eskom has proposed a two-year pilot tariff aimed primarily at new, high-load and flexible customers, including cryptocurrency-mining operations. 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 regulator says.

“Eskom’s application is informed by generation-production planning and National Transmission Company South Africa (NTCSA) system studies indicating periods of substantial surplus energy, particularly during periods of high photovoltaic (PV) generation and low demand.

“The proposed pilot seeks to provide a mechanism through which flexible loads can consume energy that might otherwise be curtailed while generating incremental revenue for Eskom. The proposed pilot would apply for 24 months and would incorporate time-of-use pricing and location-based pricing signals, with the applicable electricity price determined by the voltage category, transmission zone and operating period.”

South Africa’s electricity prices have surged more than 800% since 2007, putting significant pressure on households and industry.

The data from Eskom’s 2025/26 annual report, published last month, shows industrial demand plunged 22% (R8.8bn) in the past year because smelters curtailed production as electricity costs gobbled up about 40% of costs.

While industrial demand has plunged, the cost of energy for South Africa’s miners and industrial stalwarts has surged, with the sector paying a combined R115bn for electricity in the 2025/26 financial year, nearly R50bn more than they paid in the 2021 financial year.

To assuage a plunge in industrial demand, Eskom has been entering into negotiated price agreements (NPAs) to provide relief to high-energy users in a bid to save thousands of jobs, the latest being the country’s last remaining manganese alloy smelter, Transalloys.

In June, Nersa approved a new electricity tariff framework that provides a cumulative 54% discount on power rates for the Glencore-Merafe Chrome Venture and Samancor Chrome compared to their late-2025 pricing.

The regulator in August granted a special discounted base tariff for the Manganese Metal Company (MMC), the world’s largest non-Chinese producer of selenium-free electrolytic manganese metal.

ArcelorMittal South Africa, which spent R3.5bn in the past financial year on electricity, has also asked for tariff relief.

Nersa has admitted that the NPAs — originally designed to protect trade-exposed heavy industries such as smelters — have not been the economic panacea they were intended to be.

A new report by Bloomberg shows the yawning gap between the cost of electricity in China versus South Africa, which has handed Beijing a competitive advantage in its mass industrial expansion. The study by Bloomberg found industrial electricity prices reached R1,652/MWh in 2025, compared with R964/MWh in China, while weak rail performance continues to constrain mining and exports.

Nersa shed further light on the crypto companies that have raised their hand for Eskom’s pilot. “Two cryptocurrency-mining companies have expressed interest in connecting to Eskom’s network, with combined initial demand of approximately 10MW and potential expansion of up to 500MW,” it said.

“These operations are characterised by flexible, containerised infrastructure and a willingness, subject to technical and commercial feasibility, to locate near generation facilities such as Grootvlei Power Station. The applicants have also indicated potential ancillary community-development initiatives.”

Business Times