Eskom has a R1.20/kWh offer for bitcoin miners

Eskom’s plan to sell surplus electricity to cryptocurrency miners at a discount has drawn support from the crypto sector, but whether it works will depend on the size of the discount, who else qualifies and how miners are made to switch off when the grid is under pressure, says Steven Boykey Sidley, a partner at Bridge Capital.

Energy regulator Nersa is consulting on Eskom’s proposed two-year pilot tariff for cryptocurrency mining and other flexible-load customers, which sets a benchmark price of about R1.20/kWh. Comments close at 4pm on 23 October, public hearings are planned for 3 November and Nersa’s decision is due to be published on 7 December.

“The idea behind this is a no-brainer – sell electricity at a discount when no one else wants it. The devil lies in the details, though,” said Sidley, a professor of practice at the University of Johannesburg who has written two books on bitcoin and crypto.

“How much is that discount and is it economically justifiable? What other so-called ‘time-flexible’ off-takers are there beside bitcoin miners? Do the bitcoin miners switch off voluntarily during peak hours, or is there auto-telemetry to do so? But it’s unquestionably a good idea for Eskom, if the details are properly considered.”

Christo de Wit, South Africa country manager at cryptocurrency exchange Luno, called the proposal “innovative and forward-looking” and said it “puts surplus electricity to productive use”.

Nersa’s consultation paper, published last week, answers some of those questions but leaves others open.

On price, the R1.20/kWh benchmark applies only to customers in the highest-voltage category in the southern region; rates in other transmission zones and voltage categories would be escalated in line with Megaflex, and customers supplied below 500V are excluded.

Based on Megaflex

The pilot is based on Megaflex, Eskom’s time-of-use tariff for large customers, but most weekday daytime hours that are standard-rated under Megaflex would become off-peak, and the paper puts operating windows at roughly 12 to 16 hours a day. The full schedule of demand, capacity and network charges is unpublished, so the complete cost of participation cannot yet be assessed.

On other off-takers, the pilot is open to “other qualifying flexible customers”, and Nersa asks whether cryptocurrency mining should be “treated as a distinct customer category” or whether the tariff should “be available to all customers meeting defined technical and operational requirements”.

In April, Agnes Mlambo, then Eskom’s acting head of distribution, said manufacturers had struggled to take up surplus power: “In a manufacturing environment, it is not that easy to ramp up and down your production.”

On switching off, the paper does not settle the matter. Participants “may be required to participate in demand-response programmes”, and Nersa asks stakeholders whether “mandatory demand-response capability, minimum curtailment requirements, response times, telemetry, metering, dispatch instructions and penalties for non-performance should form part of the pilot”.

Eskom’s case rests on a surplus. It estimates spare capacity may range from about 5GW to 7GW at times, driven by daytime solar generation and low demand at night, and that more than 5TWh could be curtailed in 2028 under the scenarios considered.

Curtailment – instructing wind and solar plants to stop generating – is costly, because power purchase agreements compensate producers for energy they stood ready to deliver. Solar curtailment instructions rose from about 100 a month earlier this year to more than 1 000 a month, and the National Transmission Company South Africa (NTCSA) said in July that claims under verification and settlement had fallen to R1.5-billion, from about R2-billion in mid-June.

Two cryptocurrency mining companies have expressed interest, with “combined initial demand of approximately 10MW and potential expansion of up to 500MW”, the paper says.

The Texas precedent

Sidley pointed to “international precedent, particularly in Texas”. Riot Platforms is one example. In the first quarter of 2026, the Nasdaq-listed miner earned US$21-million in power credits: $13.5-million largely from selling contracted power back to the grid instead of using it, and $7.5-million from demand-response programmes run by the Electric Reliability Council of Texas (Ercot) and its US Midwest counterpart, MISO. Net of those credits, Riot put its all-in power cost at 3 US cents/kWh.

The strategy is not new. In August 2023, Riot said it had earned an estimated $31.7-million in credits after “curtailing its power usage by more than 95% during periods of peak demand” on Ercot’s grid.

A person involved in South Africa’s bitcoin-mining sector, who asked not to be named and whose business would stand to benefit from a cheaper tariff, argued that miners offer exactly what a surplus grid needs.

“Eskom has an excess power problem, and what they need is interruptible, intelligent, programmable power demand to stabilise the grid,” he said. Mining rigs built on Asics, the specialised chips used to mine bitcoin, “can be switched on and off at will like boiling a kettle”, he said, which he argued could help keep the grid’s frequency “stable at 50Hz”.

The pilot, however, is a tariff, not a contract to supply grid-balancing services. The NTCSA’s system operator sets separate technical requirements for frequency reserves: instantaneous reserve must be fully available within 10 seconds. Loads can provide it through demand response, but the paper leaves open what response times and penalties would apply to miners.

Nor is the proposed price low enough for the bitcoin insider. “No, you’ve got to get it sub-$0.05, so it’s not yet economical at all. But it’s a good start,” he said. At the rand’s level of about R16.36 to the dollar early on 30 September, $0.05 is about 82c. He did not say if that was all-in.

He also argued that rising tariffs are pushing customers off the grid, citing a “complete demand collapse”. Eskom’s sales fell 6.2% to 178TWh in FY2026, though its profit more than doubled.

Caveats remain

One prospective operator is more optimistic. According to the paper, it indicated that about R1.30/kWh, with a 14- to 16-hour daily window, “could be commercially viable and sustainable”, though the paper does not say whether that is all-in, and Nersa says such indications are not “independent evidence” of viability.

Nersa warns that, if unmanaged, cryptocurrency mining “may place additional pressure on system capacity, increase emissions and create pricing distortions”, and that preferential tariffs may create “risks of unintended cross-subsidisation or costs being shifted to other customer categories”. Eskom says the pilot should be revenue-neutral in FY2027.

There is a precedent for shielding other customers. When Nersa approved a 62c/kWh concessionary price in May for ferrochrome smelters Samancor Chrome, for five years, and Glencore-Merafe, for three, it ordered that any revenue shortfall be ring-fenced within Eskom and not recovered from standard tariff customers. – © 2026 NewsCentral Media