The Bitcoin mining sector confronts several hurdles, encompassing power-related concerns, soaring maintenance expenses, chip shortages, and regulatory resistance. Nevertheless, prominent entities such as Binance and Tether have already made forays into Bitcoin mining, showcasing their influence and involvement in the industry.
As the industry is expected to grow with the entry of more firms, the United Arab Emirates (UAE) is positioning itself as an attractive destination for establishing mining operations. Jaran Mellerud, a Business Development Associate at Luxor, highlighted on Twitter that the UAE is poised to become the “prime destination” for Bitcoin miners in the Middle East.
Mellerud pointed out that assuming an average energy efficiency of 30 J/TH, BTC miners in the UAE could generate around 13 EH/s, which accounts for approximately 3.7% of Bitcoin’s total hashrate. This places the UAE ahead of neighboring “energy-rich” countries such as Oman, Kuwait, Saudi Arabia, Bahrain, and Qatar. Mellerud emphasized that while these countries possess significant mining potential, it is the UAE that is leading the way with its innovation.
UAE Shines As Ideal Haven For Bitcoin Miners
The UAE offers several advantages for Bitcoin miners. Firstly, it is in a favorable position compared to Western counterparts due to its continuous expansion of electricity supply, surpassing the pace seen in the US and Europe.
The recent opening of Barakah, the largest nuclear power plant in the Arab region, is expected to provide Bitcoin miners with abundant and affordable electricity while increasing the need for demand flexibility.
While UAE nationals and farmers enjoy cheap electricity rates, industrial consumers, including larger miners, pay around $0.04 to $0.05 per kWh. Mellerud highlighted that some UAE citizens have set up small Bitcoin mining farms in their backyards and basements to take advantage of the heavily subsidized electricity rate of $0.02 per kWh.
Moreover, the UAE is a business-friendly region and ranks highly in terms of ease of doing business, providing additional benefits for Bitcoin miners. The country has also demonstrated a positive stance toward cryptocurrencies, fostering favorable relationships with government organizations, banks, and service providers.
However, it is important to note that the Bitcoin mining industry in the UAE is still in its early stages. The region faces challenges due to its extremely hot climate and the lack of essential regulations, except for semi-governmental projects. This creates a legal gray zone for most miners.
Nonetheless, companies like Marathon Digital have already established operations in the UAE. In collaboration with Zero Two, backed by Abu Dhabi’s sovereign wealth fund, Marathon Digital formed a joint venture to develop the Middle East’s first large-scale Bitcoin mining operation. CEO Fred Thiel expressed the intent to build next-generation mining facilities in Abu Dhabi through this partnership. Such initiatives pave the way for potential growth, and it may only be a matter of time before the UAE emerges as a significant Bitcoin mining hub.