Bitcoin mining companies have been looking for a suitable region to call home ever since they were forced to leave China.
Many of them are now eyeing the United Arab Emirates as a potential location to set up shop in, as the country started emerging as the crypto mining hub in the Middle East.
Some major mining companies have already signed agreements and entered partnerships with the digital asset arm of a sovereign wealth fund from Abu Dhabi.
The fund, known as Zero Two, partnered with a native Bitcoin mining company Phoenix Technology in 2021. The move started a Bitcoin mining revolution in the region.
While mining companies were slow to approach, they are developing a strong interest in operating in the area.
The momentum kickstarted by Zero Two and Phoenix Technology’s partnership was continued earlier in 2023, when the fund entered its second partnership.
This time, it teamed up with a US mining company, Marathon Digital.
As of early July 2023, the UAE’s operational Bitcoin mining capacity is approximately 4% of Bitcoin’s global hashrate.
This translates to around 400 megawatts, according to Bitcoin mining expert Jaran Mellerud.
He noted that at an assumed average energy efficiency of 30 J/TH, BTC miners in the UAE should generate approximately 13 EH/s. This represents 4% of the total Bitcoin hashrate.
UAE has an abundance of energy useful to the miners
Apart from being crypto-friendly, unlike China, the UAE can also offer abundant energy resources.
All of the country’s electricity is generated by natural gas, but the nation is making a shift toward nuclear and solar power.
The UAE just opened the largest nuclear power plant in the region, with a total capacity of 4 gigawatts.
Furthermore, it is set to expand this year, so the influx of nuclear energy will boost the demand for flexibility.
The country is also perfectly positioned to benefit from solar power. The region features massive solar fields that produce large amounts of additional energy, periodically.
A lot of their energy is wasted via the desalination plants. This wasted power can be put to a better purpose by directing it toward Bitcoin mining companies.
The UAE will become the major mining nation over the next few years
The researcher concluded that Bitcoin miners could have a future in the UAE.
With that in mind, it is likely that they will continue to approach the country and enter into new partnerships and collaborations with the fund, and the local authorities.
Mellerud believes the UAE will become a major Bitcoin mining nation in several years. More than that, it could be an example for neighboring countries.
At the moment, mining profitability remains low, despite seeing an increase recently.
At this time, miners earn $0.077 per terahash per second (TH/s) each day. At its peak, it was at $0.40 TH/s/day in 2021, when the industry was at the height of the bull market
Bitcoin mining activity in the UAE has seen a huge surge in recent months. The country is now estimated to account for around 4% of the global Bitcoin hash rate, making it one of the top mining destinations in the world.
There are a few reasons for the surge in Bitcoin mining activity in the UAE. First, the country has a very favorable regulatory environment for cryptocurrency mining. The UAE government has not imposed any restrictions on Bitcoin mining, and it has even expressed support for the industry.
Second, the UAE has a lot of cheap and renewable energy. This is important for Bitcoin mining, as it is a very energy-intensive process. The UAE has a number of solar and nuclear power plants, which provide cheap and clean energy for Bitcoin miners.
Third, the UAE has a well-developed infrastructure for hosting data centers. This makes it easy for Bitcoin miners to set up shop in the country.
The surge in Bitcoin mining activity in the UAE is likely to continue in the future. The country has all the ingredients that Bitcoin miners are looking for: a favorable regulatory environment, cheap and renewable energy, and a well-developed infrastructure.
Here are some of the key drivers of the surge in Bitcoin mining activity in the UAE:
- Favorable regulatory environment: The UAE government has been supportive of the cryptocurrency industry, and it has not imposed any restrictions on Bitcoin mining. This has made the country an attractive destination for Bitcoin miners.
- Cheap and renewable energy: The UAE has a lot of cheap and renewable energy, which is important for Bitcoin mining. The country has a number of solar and nuclear power plants, which provide cheap and clean energy for Bitcoin miners.
- Well-developed infrastructure: The UAE has a well-developed infrastructure for hosting data centers. This makes it easy for Bitcoin miners to set up shop in the country.
The surge in Bitcoin mining activity in the UAE is likely to have a number of positive implications for the country. First, it will create jobs and boost the economy. Second, it will help to diversify the country’s economy away from oil. Third, it will make the UAE a leader in the global cryptocurrency industry.
However, there are also some potential risks associated with the surge in Bitcoin mining activity in the UAE. First, it could put a strain on the country’s electricity grid. Second, it could lead to environmental pollution. Third, it could attract criminals who are looking to use Bitcoin for illegal activities.
Overall, the surge in Bitcoin mining activity in the UAE is a positive development for the country. However, it is important to be aware of the potential risks associated with this activity.