The United Arab Emirates (UAE) is gradually solidifying its status as a go-to Bitcoin mining destination in the Middle East. The region in the Middle East has established itself as a pro-Web3 destination for crypto-focused companies with 30 free trade zones in the country and by 2023, the region has slowly climbed up in the Bitcoin mining hashrate chart as well.
The Bitcoin mining journey in UAE began with Marathon Digital, a Bitcoin mining company partnering with Zero Two, the digital asset arm of Abu Dhabi’s sovereign wealth fund, in May this year. The joint venture established two mining sites with a combined 250-megawatt capacity in Abu Dhabi.
Abu Dhabi has now become a hub for all kinds of crypto mining activity in the UAE owing to its energy efficiency and its status as the centre of trade in the country.
According to data shared by the Hashrate index, UAE’s combined Bitcoin mining capacity is likely around 400 megawatts (MW) – or 4% of Bitcon’s global hashrate. While the likes of the United States, China, Russia and Kazakhstan are the top four countries with the highest global Bitcoin hashrate share, UAE could gradually climb up the ladder due to the resources it offers.
As a global player in the energy market, UAE has shifted its focus from its oil and gas reserves towards solar and nuclear energy. Historically, the country’s electricity was generated by natural gas but over the recent past, shares of nuclear and solar are growing rapidly.
UAE’s electricity demands fluctuate significantly between the hottest and coolest months, leading to a heavy loss of generated electricity. For example, in 2021, the UAE’s combined power and desalination plants wasted 20 TWh, equal to approximately $600 million. This gap and wastage of electricity could be filled by Bitcoin miners.
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With Bitcoin mining focused on using clean energy sources, UAE over the next decade could see a significant chunk of its energy coming from nuclear and renewable sources. Thus, the surplus from these sources could be utilized by miners in the country. Another advantage for miners touted by the country is its zero tax policy.
This means Bitcoin miners can register in one of the country’s more than 30 free trade zones and avoid corporate tax, VAT, and import duties. While there are no specific laws governing the crypto mining industry, miners can operate in legal free trade zones, which could imply a significant advantage over operating in the West.
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